Papa Talla Sylla, an analyst from Citi, has initiated a new Buy rating on Lumentum Holdings (LITE).
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Papa Talla Sylla has given his Buy rating due to a combination of factors that highlight Lumentum Holdings’ strong position in the AI optics market. The company is expected to outperform both its own and the market’s long-term expectations, driven by its industry-leading Electro-absorption Modulated Laser (EML) technology and new AI products in emerging markets like Optical Circuit Switch (OCS) and Co-packaged Optics (CPO). This positions Lumentum to potentially achieve significant sales and earnings per share growth by FY2027.
Furthermore, Lumentum is seen as a primary beneficiary of the AI accelerators ramp, being a key supplier for a substantial portion of EML-based transceivers. The company’s strategic capacity planning has been reassuring, mitigating concerns about potential risks. Over the next year, Lumentum is favored over its competitor, Coherent (COHR), due to its higher growth prospects, faster margin expansion, and a more diversified AI optics portfolio. Upcoming industry conferences are anticipated to act as catalysts, further boosting the company’s stock performance.