Lumentum Holdings (NASDAQ: LITE) soared in trading on Monday after the designer and manufacturer of optical and photonic products announced the acquisition of Cloud Light Technology for $750 million in cash. The transaction will also include the assumption and substitution of outstanding unvested Cloud Light options.
The acquisition is expected to close by the end of this year and is projected to be immediately accretive to adjusted earnings per share and to more than double Lumentum’s cloud intra-data center infrastructure revenue in the year following the close of the transaction.
This transaction is likely to expand Lumentum’s cloud intra-data center capacity by more than five times with a potential opportunity for revenues to exceed $10 billion by 2028 indicating a compounded annual growth rate (CAGR) of 30%.
Is Lumentum a Good Stock?
Analysts are cautiously optimistic about LITE stock with a Moderate Buy consensus rating based on seven Buys, five Holds and two Sells. The average LITE price target of $50.25 implies an upside potential of 22.3% at current levels.
