Stifel has raised its price objective on Lumentum (NASDAQ: LITE) to $480 from $400 and reiterated a Buy rating after the optical components and systems supplier delivered stronger-than-expected results for fiscal second-quarter 2026. The shares were trading around $435.10, close to a 52-week high of $464, and have returned roughly 404% over the past year.
Management reported fiscal Q2 2026 revenue and adjusted earnings per share that exceeded the company's own guidance by 2% and 19%, respectively. At the same time, the midpoint of Lumentum's guidance for the fiscal third quarter outpaced consensus forecasts, with revenue roughly 14% above analyst expectations and EPS at the midpoint about 40% higher than estimates.
Stifel’s analysis notes that the March-quarter guidance corresponds to an implied sequential revenue increase near $140 million. According to the firm, roughly two-thirds of that sequential growth would be attributable to the Components segment, while about one-third is expected to come from the Systems business as it gains momentum.
In addition to Lumentum’s established growth engines - optical transceiver modules, optical circuit switches, and co-packaged optics (CPO) for scale out - company management described a fourth longer-term growth driver they call "optical scale up." Stifel highlighted this addition as complementary to the existing pillars and consistent with the brokerage's view that rising AI-driven network traffic is amplifying complexity and scale across data-center networks, positioning Lumentum as a primary beneficiary of those industry dynamics.
The company’s reported GAAP and non-GAAP measures reflected the stronger quarter. Lumentum posted earnings per share of $1.67, topping the $1.39 forecast, and reported revenue of $665.5 million versus a projected $646.7 million. The performance aligns with InvestingPro data cited by analysts showing Lumentum’s revenue expanded by 48.89% over the last twelve months.
Investor interest has been buoyed by the results and accompanying analyst activity. Separately, B. Riley moved its rating on Lumentum from Neutral to Buy and materially raised its price target to $526.00 from $147.00, citing catalysts including expectations for rapid scaling of Optical Circuit Switching in the second half of 2026 and a ramp of Co-Packaged Optics starting in early 2027.
Context and market implications
The combination of upside to guidance, accelerated top-line growth, and new strategic framing from management has reinforced analyst conviction that Lumentum stands to capture a growing portion of optical spend tied to AI-driven networking demands. The results and ensuing analyst moves are likely to draw particular attention from investors focused on semiconductors, optical networking, and data-center hardware exposure.
Key takeaways
- Stifel increased its price target on Lumentum to $480 from $400 and maintained a Buy rating following stronger-than-expected fiscal Q2 results.
- Lumentum beat management guidance on fiscal Q2 revenue and adjusted EPS by 2% and 19%, and its fiscal Q3 midpoint guidance exceeded consensus by 14% on revenue and 40% on EPS.
- Analysts point to AI-driven network traffic and a newly articulated "optical scale up" growth driver, alongside existing focuses on optical transceiver modules, optical circuit switches, and CPO, as reasons the company could benefit from increasing optical demand.
Risks and uncertainties
- Guidance sensitivity - The March-quarter outlook implies approximately $140 million in sequential revenue growth; actual results may vary versus that implied ramp, affecting revenue and profitability expectations. This impacts the optical components and systems segments directly.
- Execution risk for new initiatives - Management has introduced "optical scale up" as a new, longer-term growth driver. The magnitude and timing of benefits from that initiative are uncertain and depend on successful commercial execution across products and segments.
- Analyst assumption dispersion - Different brokerages are valuing future scaling of technologies such as Optical Circuit Switching and Co-Packaged Optics at different levels, which creates variability in forward-looking estimates and price targets for investors in the semiconductor and networking equipment sectors.
Conclusion
Strong fiscal Q2 results, bullish near-term guidance, and heightened analyst attention have combined to lift expectations for Lumentum. Stifel’s price-target increase and B. Riley’s upgrade underscore a positive analyst reaction to the company’s current trajectory, while the specifics of execution on newly emphasized growth areas will be watched closely by market participants.