Lumentum Holdings: Hold Rating Amid Valuation Concerns and Competitive Pressures

Morgan Stanley analyst Meta Marshall maintained a Hold rating on Lumentum Holdings (LITE – Research Report) yesterday and set a price target of $76.00.

Meta Marshall has given his Hold rating due to a combination of factors. The valuation of Lumentum Holdings appears to be fully priced, especially considering the competitive nature of its market segments, such as the Cloud Light business, and potential risks from tariffs. Despite this, the company has shown positive momentum, as evidenced by an upward revision in their financial guidance and a significant stock price increase following the OFC event.
While Lumentum has revised its fourth-quarter revenue and operating margin expectations upwards, indicating improved performance, the valuation remains a concern. The company’s ability to achieve higher margins seems to stem from a mix of its business lines, including the EML/telco and Cloud Light sectors. However, given the current valuation and competitive pressures, the Hold rating reflects a cautious stance until further clarity on business mix and sustained performance is observed.

Marshall covers the Technology sector, focusing on stocks such as Hewlett Packard Enterprise, Cisco Systems, and Coherent Corp. According to TipRanks, Marshall has an average return of 6.9% and a 58.36% success rate on recommended stocks.