Key Takeaways
- Lumentum rose 11% in a week on an optics rebound and a Bloomberg report that Marvell Technology is in advanced talks to buy it.
- A deal reportedly paid in Marvell stock would tie any premium to Marvell’s share price.
- Coherent would be the big laser supplier not controlled by a chip designer.
- Analysts expect Lumentum’s EPS to roughly quadruple by fiscal 2028, and its Nov. 5 report matters more than the deal.
Lumentum (LITE) stock is up 11% in the past week:
Optics stocks rebounded, then Bloomberg reported that Marvell Technology (MRVL) is in advanced talks to buy Lumentum. That would leave Coherent (COHR) as the big laser supplier not controlled by a chip designer.
Marvell Would Reportedly Pay in Stock
Bloomberg Intelligence technology analyst Mandeep Singh sized up the deal on the Bloomberg Intelligence podcast on Thursday: “This deal will be definitely close to $100 billion if you think about the size.”
That’s about 31% above Lumentum’s $76.2 billion value at Friday’s close.
But Marvell was worth about $221 billion when the report came out, and it had just $3.93 billion of cash on Aug. 1. The deal would reportedly be paid in Marvell shares, and Marvell stock fell 13% on Thursday.
That ties any premium for Lumentum holders to Marvell’s share price.
TIKR Tracks 28 Analysts on Lumentum. How Many Say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Lumentum, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Lumentum’s Analyst Ratings
Coherent Would Be on Its Own
Lumentum and Coherent both fell on Friday as Intel’s and Amazon’s results deepened AI-spending fears.
Coherent’s revenue rose 34% to $2.05 billion in the quarter ended June 30, and it reports after the close on Nov. 4. NVIDIA put $2 billion into each company in March, but neither is run by a chip designer today. Will customers that want an independent laser supplier send Coherent more orders?
Lumentum’s Nov. 5 Report Matters More Than the Deal
Analysts expect Lumentum’s normalized EPS to roughly quadruple, from $8.67 in fiscal 2026 to $35.72 in fiscal 2028:
Its forward P/E was 42x at Thursday’s close. That’s above its 30x five-year average and about half of May’s 80x peak:
Friday’s drop took it to about 39x, just under its three-year average of 40x. The $1,166 consensus target is about 39% above Friday’s close.
Lumentum reports after the close on Nov. 5 and has guided to adjusted EPS of $4.05 to $4.35. Watch the shortfall in its EML laser chips, which management put at more than 30% of demand in May.
Coherent is adding supply, though: it set out to double its indium phosphide laser output by the end of September, and its Nov. 4 report should show whether it got there.
Frankly, I’d buy Lumentum on its earnings alone, deal or no deal. Of course, a shortfall well under 30% would mean the scarcity is easing, and at 39x, the stock has room to fall.
So What Is Lumentum Stock Actually Worth if the Deal Doesn’t Go Through?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
