Home / Business and Economy / Barclays Sees 36% Upside for Lumentum
Barclays Sees 36% Upside for Lumentum
20 Jul
Summary
- Barclays upgraded Lumentum to overweight with a $1,000 price target.
- Stock has fallen 18% in three months amid AI optics demand concerns.
- Analyst sees strong fundamentals and attractive risk/reward on pullback.
Barclays has upgraded Lumentum Holdings, a maker of optical and photonic technologies, to an overweight rating with a maintained price target of $1,000. This forecast suggests a potential 36% increase from its recent closing price.
Although Lumentum's shares have surged nearly 100% year-to-date, significantly outperforming the S&P 500, they have experienced an 18% decline over the past three months. This pullback stems from investor concerns regarding the sustained demand for the company's optics-based technologies crucial for the artificial intelligence industry.
Analyst Tom O'Malley of Barclays believes Lumentum is poised for a recovery as investors evaluate business updates and semiconductor industry trends during the upcoming earnings season. He noted that Lumentum has underperformed the iShares Semiconductor ETF (SOXX) by approximately 40% in the last three months, attributing this to a belief that co-packaged optics scale-up has been delayed. O'Malley maintains that fundamental demand for transceivers and lasers remains robust, making the current stock price an appealing opportunity.
Lumentum is scheduled to report its fiscal fourth-quarter earnings on August 11. The analyst's positive outlook aligns with the broader Wall Street consensus, where 22 out of 27 covering analysts recommend a buy or strong buy rating for the stock.
