Stifel Lifts Lumentum’s PT After 4Q Earnings Beat Estimates

Stifel increased Lumentum Holdings’ price target to $105 (16.9% upside potential) from $93 and reiterated a Buy rating after the company reported better-than-expected 4Q earnings and provided an upbeat outlook. Shares of the optical and photonic component manufacturer rose nearly 2.1% on Tuesday.

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Stephen analyst John Marchetti said that Lumentum (LITE) “delivered results and guidance which highlighted the strong underlying demand fundamentals in its optical business and an improved profitability model that should be sustainable over the long-term.” Marchetti believes that “any future Huawei-related headwinds will be offset by growth from other Chinese vendors.” He added that the stock remains “best positioned” to capitalize on “strong” growth drivers.

On Tuesday, Lumentum reported better-than-expected top-line results for 4Q as revenues of $368.1 million beat analysts’ expectations of $349.2 million. The company’s adjusted EPS of $1.18 surpassed Street estimates of $0.82.

Moreover, the mid-point of the company’s 1Q revenue guidance range of $430-$455 million is higher than the Street forecast of $437.4 million. The mid-point of the adjusted EPS outlook of $1.40-$1.55 is above analysts’ expectations of $1.41.

Currently, the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 9 unanimous Buys. The average price target of $106.89 implies upside potential of about 19%. (See LITE stock analysis on TipRanks).