US$86.00 - That's What Analysts Think Lumentum Holdings Inc. (NASDAQ:LITE) Is Worth After These Results

Shareholders will be ecstatic, with their stake up 35% over the past week following Lumentum Holdings Inc.'s (NASDAQ:LITE) latest first-quarter results. Revenue of US$337m came in 3.6% ahead of expectations, although statutory earnings didn't fare nearly so well, recording a loss of US$1.21, a 19% miss. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Lumentum Holdings

Taking into account the latest results, the most recent consensus for Lumentum Holdings from 15 analysts is for revenues of US$1.59b in 2025. If met, it would imply a solid 15% increase on its revenue over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 60% to US$3.28. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$1.52b and losses of US$3.05 per share in 2025. Overall it looks as though the analysts were a bit mixed on the latest consensus updates. Although there was a nice uplift to revenue, the consensus also made a pronounced increase to its losses per share forecasts.

The average price target rose 42% to US$86.00, even thoughthe analysts have been updating their forecasts to show higher revenues and higher forecast losses. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Lumentum Holdings at US$115 per share, while the most bearish prices it at US$51.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Lumentum Holdings' past performance and to peers in the same industry. For example, we noticed that Lumentum Holdings' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 21% growth to the end of 2025 on an annualised basis. That is well above its historical decline of 3.1% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 7.9% annually. Not only are Lumentum Holdings' revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Lumentum Holdings. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Lumentum Holdings going out to 2027, and you can see them free on our platform here..

It is also worth noting that we have found 2 warning signs for Lumentum Holdings (1 shouldn't be ignored!) that you need to take into consideration.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.