In a report released today, Meta Marshall from Morgan Stanley maintained a Hold rating on Lumentum Holdings (LITE – Research Report), with a price target of $70.00.
Meta Marshall has given his Hold rating due to a combination of factors impacting Lumentum Holdings. The company has shown impressive ability to ramp up production and meet strong demand, particularly in the AI capex space. However, the ongoing uncertainty surrounding tariffs poses a significant risk. The potential extension of tariffs beyond China into Southeast Asia could severely impact Lumentum, given the challenges in relocating optical component production.
While the company is taking steps to mitigate these risks by moving capacity to Thailand and considering contract manufacturing, these measures may not fully offset the potential negative impact on margins. Despite a positive surprise in gross margins and an optimistic outlook on demand, the unsettled tariff landscape and its implications lead to a cautious stance. Therefore, the Hold rating reflects a balance between the company’s operational strengths and the external risks it faces.
According to TipRanks, Marshall is a 4-star analyst with an average return of 6.0% and a 56.49% success rate. Marshall covers the Technology sector, focusing on stocks such as Arista Networks, Five9, and Hewlett Packard Enterprise.