Key Takeaways
- Lumentum fell 11% in the past week as the AI hardware selloff hit Marvell, whose all-stock offer drives its price, and it lagged Coherent’s rebound.
- September-quarter revenue rose 136.5% to $1.26 billion, and the December-quarter guide is higher still.
- The offer pays a fixed 4.5 Marvell shares and isn’t expected to close until the first half of 2028.
- Below the offer’s value, Lumentum is a cheaper way into the combined company for patient investors.
Lumentum (LITE) stock is down 11% in the past week, and almost none of that came from Lumentum’s own business. Marvell Technology (MRVL) agreed on Nov. 2 to buy it for a fixed 4.5 Marvell shares apiece. Marvell then sold off with the rest of AI hardware, and the offer shrank with it.
That’s also why Lumentum lagged Coherent (COHR) when optics stocks bounced back on Friday and Monday.
Every Marvell dollar costs $4.50
Each Lumentum share becomes 4.5 Marvell shares, so every dollar Marvell loses takes $4.50 off the offer. At the Oct. 28 prices the companies used, the offer was worth about $1,132 a share, a 23.9% premium. Marvell fell 12.7% the day the deal was announced, then the Democrats’ midterm sweep hit data-center stocks on Nov. 4, and Marvell lost 16% on Nov. 5 as the AI chip selloff deepened. By Friday’s close, the offer was worth about $635, and Lumentum closed roughly 15% below even that.
The business has never looked better
Lumentum’s own business is booming. September-quarter revenue rose 136.5% to $1.26 billion, and management guides for 1.575-1.625 billion in the December quarter. It also landed its second major NPO/CPO (near- and co-packaged optics) win, backed by more than $5 billion of purchase commitments, and its 53.2% non-GAAP gross margin tops Coherent’s 40.6%. CEO Michael Hurlston told CNBC on Friday that “our demand couldn’t be stronger.” Analysts expect normalized EPS to more than quadruple from fiscal 2026 to fiscal 2028 (years to June):
Some price targets fell with Marvell’s stock anyway. Bernstein cut its target to $635 from $900 on Monday, right at Friday’s offer value, and kept Outperform.
TIKR tracks 26 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
Is Lumentum a buy below the offer?
At Friday’s close, Lumentum traded at 18.5x forward earnings, against a five-year average of 30.1x:
But Lumentum holders end up with Marvell stock, so the multiple that matters is Marvell’s. The deal adds about 49% to Marvell’s share count, and Marvell traded near 30x forward earnings on Nov. 2, below its 33x five-year average. Closing needs regulatory approvals, including China’s, and Lumentum expects the deal to take about 12 to 18 months to close. If the deal fails on regulatory grounds, Marvell owes Lumentum a $3.2 billion fee.
The discount makes Lumentum the cheaper way into the combined company for anyone who wants to own it through 2028. Anyone who doesn’t want Marvell stock shouldn’t want Lumentum right now either. Marvell’s Dec. 1 report is the next test, then Lumentum’s December-quarter report, expected in February.
So what is Lumentum stock actually worth if the deal doesn’t go through?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Lumentum could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
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!
