Lumentum Holdings' analyst price target has been raised as strong near-term AI datacenter demand for EML lasers, favorable product mix, and robust order growth drive upward guidance and margin strength, offset by some valuation concerns, with fair value now seen at $143.79.
Analyst Commentary
- Bullish analysts highlight strong near-term demand momentum, particularly for 200G EML lasers in AI-driven data center infrastructure, with supply ramping to meet significant order growth.
- Record Q4 beats and upward guidance revisions are driven by datacom product strength, especially EMLs and transceivers, as well as robust revenue and shipment growth linked to AI infrastructure spending.
- Pricing power, ongoing supply constraints, and favorable product mix are supporting higher margins and are expected to continue fueling positive share performance.
- Mid-term growth drivers include the scaling of optical circuit switch and ultra-high-power laser products, leading to substantial order backlogs and further momentum.
- Bearish analysts caution that much of the positive outlook may already be priced in, with current valuations at a premium to historical multiples amidst rising sector competitiveness.
What's in the News
- Lumentum Holdings will expand its U.S.-based semiconductor manufacturing facility, enhancing its role in the AI supply chain and creating additional high-skilled jobs.
- The company has completed the buyback of 7,685,774 shares, totaling $630.38 million, representing 10.55% of shares under its announced program.
- Lumentum recorded a $0.1 million intangible asset write-off for the quarter ended June 28, 2025.
- Earnings guidance for Q1 fiscal 2026 projects net revenue between $510 million and $540 million.
- Lumentum Holdings was added to multiple Russell growth indexes, reflecting increased visibility and potential investor interest.
Valuation Changes
Summary of Valuation Changes for Lumentum Holdings
- The Consensus Analyst Price Target has risen slightly from $139.84 to $143.79.
- The Future P/E for Lumentum Holdings has risen slightly from 33.76x to 34.67x.
- The Discount Rate for Lumentum Holdings remained effectively unchanged, moving only marginally from 8.77% to 8.73%.
Disclaimer
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