According to JPMorgan, laser and light wave product maker Lumentum will appeal to investors who may have seen short-term demand challenges in the past. Analyst Samik Chatterjee upgraded the stock, which is known in part for its autonomous driving technology, to overweight from neutral and raised his price target by $6 to $60. Chatterjee’s new price target implies that the stock could rise 32.6% from Friday’s close. “We believe current valuations are pricing in many of the opposite directions from reality, even while cautiously considering additional short-term downsides to estimates due to further loss of stake in 3D. Sensing as well as streamlining inventory from Telecom and Datacom customers,” he said in a note sent to a second customer. Shares were up 2.6% in premarket trading. Shares are down 13.3% this year. He noted that LITE YTD mountain shares Lumentum Company is facing a “perfect storm” of demand. The data communications business has been hit by the larger challenges facing cloud companies, while the commercial laser business has felt macro headwinds that have dampened operations. industrial movement. Meanwhile, he said Lumentum was already facing challenges with equipment suppliers purchasing equipment, and noted that the company could see a further decline in business activity. its three-dimensional sensor. But he said lower revenue estimates are to blame for potential losses in three-dimensional sensing. And Chatterjee said his expectations for the company’s earnings have improved with more balance sheet flexibility. Looking specifically at fiscal 2025, he increased his earnings estimate to $5.9 from $5.5. He said 2025 will be the year of earnings normalization as demand trends stabilize and the company feels the full benefits of a planned share buyback of about $500 million over a two-year period. In the meantime, he said consensus estimates of earnings per share in 2023 and 2024 could fall even further. However, he notes that the stock will trade under a 10x price-to-earnings multiplier in both years, well below its historical price multiplier. of 13x. That makes for an attractive entry point, he said, with “current valuations are more risky than we see as reality or assumption that lower demand for Telecom and Datacom is due to structure rather than structure.” not cyclical.” — Michael Bloom of CNBC contributed to this report.
