Lumentum Holdings (LITE) Stock Forecast & Price Target

Lumentum Holdings Inc. has provided optimistic guidance for 1Q26, projecting revenues between $510 million and $540 million, along with earnings per share estimated between $0.90 and $1.10, while advancing its target for $600 million in quarterly revenues to 4Q26. The company anticipates achieving gross margins at the high end of 37% to 40%, facilitated by increased laser capacity, which is expected to boost laser chip sales by over 50% and transceiver sales by approximately 40% in the coming quarters. Additionally, favorable pricing trends are expected to enhance revenue and margin potential, contributing to a projected revenue scenario of $622 million in 3Q26.

Lumentum Holdings Inc. has faced significant revenue and gross margin shortfalls for certain products due to ongoing supply chain challenges. Furthermore, weaker-than-anticipated demand for 3D sensing technology, particularly from the iPhone market, poses a risk to the company's top-line performance. Additionally, while there may be a backlog in orders for specific optical products, the continued supply constraints in critical areas such as narrow linewidth tunable lasers and ZR modules contribute to a fundamentally negative outlook for the firm.