Last Update 11 Dec 25

LPTH: Record Backlog Will Support Margin Expansion Through FY26 And FY27

Analysts have nudged their price targets on LightPath Technologies higher into a roughly $10 to $11 range, citing a record and robust backlog, accelerating revenue growth with improving margins, and confidence that the company's move up the value chain can sustain momentum through FY26 and FY27.

Analyst Commentary

Bullish analysts are aligning around a constructive view on LightPath, arguing that the recent price target hikes better reflect the company’s accelerating growth profile, expanding margins, and growing strategic relevance in its end markets.

Across recent research updates, they highlight that strong order activity, a record backlog, and a clearer path to operating leverage support higher valuation multiples and justify price targets in the low double digits.

Bullish Takeaways

Bullish analysts emphasize that LightPath’s record and robust backlog, including sizable new and follow on orders, underpins multiyear revenue visibility that they see as underappreciated in the current share price.
They view the company’s shift up the value chain toward systems and higher value solutions as a structural driver of faster revenue growth and improving gross margins, supporting higher long term earnings power.
Positive win momentum and upside potential versus existing FY26 outlooks are cited as catalysts that could drive estimate revisions and further price target increases if execution remains consistent.
Analysts also point to previously implemented operational efficiencies and ramping top line growth as setting the stage for operating leverage. If this is realized, they argue it could justify a premium valuation relative to historical levels.

Bearish Takeaways

More cautious analysts acknowledge that profitability remains lighter than some investors may prefer, arguing that sustained margin expansion and leverage must still be proven over several quarters.
There is concern that expectations embedded in higher price targets assume continued order strength and no material slippage in the sizeable backlog, leaving limited room for execution missteps.
Some warn that the company’s strategy to move further up the value chain introduces added complexity in product development and delivery, which could create near term volatility in margins and cash flow.
Analysts also note that valuation has begun to price in successful delivery on FY26 and FY27 growth ambitions, increasing sensitivity to any slowdown in bookings or delays in converting large pipeline opportunities.

What's in the News

Secured a new $4.8 million purchase order from an existing customer for advanced infrared camera systems for public safety applications, scheduled for delivery in fiscal 2026, building on prior large IR camera wins with the same customer (Key Developments).
Received $22.1 million in follow on purchase orders from a leading global technology customer for advanced infrared camera systems to be delivered in calendar 2027, following an earlier $18.2 million order for calendar 2026 (Key Developments).
Entered into a definitive agreement for an $8 million private placement of 1.6 million Class A shares at $5 per share, with equal participation from Ondas Holdings and Unusual Machines, both investing $4 million, under Regulation D (Key Developments).
Added as a constituent to the S&P Global BMI Index, which may broaden the shareholder base and increase visibility among institutional investors (Key Developments).

Valuation Changes

Fair Value: Unchanged at approximately $10.50 per share, indicating no material shift in the intrinsic value estimate.
Discount Rate: Edged down slightly from about 8.51 percent to 8.51 percent, reflecting a marginal decrease in perceived risk or cost of capital.
Revenue Growth: Essentially unchanged at roughly 35.65 percent, suggesting stable expectations for top line expansion.
Net Profit Margin: Remains effectively flat at around 8.75 percent, indicating no notable revision to long term profitability assumptions.
Future P/E: Has decreased very slightly from about 77.0x to 77.0x, implying a negligible change in the valuation multiple applied to forward earnings.

The acquisition of G5 Infrared enables LightPath to transition into a solutions provider, potentially increasing revenue with expanded offerings and defense contracts.
Strategic moves into security markets and supply chain disruptions position LightPath to boost growth and market share.
LightPath faces integration and supply chain risks and margin pressures, while relying on new product adoption and managing rising operational costs for future profitability.

Catalysts

About LightPath Technologies

Designs, develops, manufactures, and distributes optical components and assemblies.What are the underlying business or industry changes driving this perspective?

The acquisition of G5 Infrared is expected to be highly accretive and transformational, enabling LightPath to transition from a component manufacturer to a solutions and subsystem provider, potentially increasing revenue through expanded product offerings and larger contracts.
G5 Infrared's involvement in large defense programs, including programs of record expected to begin production, could significantly increase revenue by adding an established pipeline of defense contracts, providing reliable income streams from government projects.
The strategic shift to higher average sales prices (ASPs) from selling optical components to higher-value systems and cameras suggests an increase in gross and net margins by moving up the value chain and offering more complex and profitable products.
LightPath's expansion into Counter-UAS (Unmanned Aerial Systems) and perimeter security applications with G5 cameras is expected to drive growth in the fast-growing security market, potentially boosting revenue from both new and existing customers in these sectors.
The company is capitalizing on new opportunities resulting from disrupted chinese material supply, specifically for germanium, positioning itself to capture market share with its BlackDiamond Optics, potentially increasing market penetration and revenue.

LightPath Technologies Earnings and Revenue Growth

LightPath Technologies Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming LightPath Technologies's revenue will grow by 30.9% annually over the next 3 years.
Analysts are not forecasting that LightPath Technologies will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate LightPath Technologies's profit margin will increase from -30.2% to the average US Electronic industry of 9.0% in 3 years.
If LightPath Technologies's profit margin were to converge on the industry average, you could expect earnings to reach $6.8 million (and earnings per share of $0.13) by about September 2028, up from $-10.2 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 49.4x on those 2028 earnings, up from -23.5x today. This future PE is greater than the current PE for the US Electronic industry at 23.1x.
Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.24%, as per the Simply Wall St company report.

LightPath Technologies Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The company's reliance on Chinese imports, particularly for materials such as zinc selenide, zinc sulfide, and germanium, presents a supply chain risk. Disruptions like the December export restrictions could affect LightPath's ability to deliver products on time, impacting both revenue and net margins.
Despite strategic acquisitions, LightPath is still navigating the transition from a component manufacturer to a solutions and subsystem provider. Execution risks in successfully integrating new businesses, like G5 Infrared, and achieving synergistic growth could impact future earnings.
LightPath's gross margins have decreased, partly due to supply chain issues and material costs. Sustained pressure on margins, if not addressed, may continue to affect net profitability.
Significant operating expenses tied to legal, consulting fees, and acquisitions have increased, deteriorating the net loss. If such expenses continue to rise faster than revenue growth, this might negatively influence future earnings.
LightPath's transition strategy includes significant dependency on the successful ramp-up and market acceptance of its new product lines such as MANTIS cameras. Any delay or failure in broad adoption could temper expected revenue growth from these high ASP products.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $5.1 for LightPath Technologies based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $7.0, and the most bearish reporting a price target of just $3.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $75.3 million, earnings will come to $6.8 million, and it would be trading on a PE ratio of 49.4x, assuming you use a discount rate of 8.2%.
Given the current share price of $5.58, the analyst price target of $5.1 is 9.4% lower. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Acquisition And Shift To Solutions Will Unlock Future Markets