Mizuho published a note Tuesday recommending Lumentum Holdings as a buy ahead of the company's fiscal fourth-quarter results scheduled for Aug. 11. The bank kept an Outperform rating and a $1,100 price objective on the optical components maker, based on several operational and market drivers it expects to support upside.
Estimates and near-term revenue trajectory
Mizuho reiterated its June-quarter revenue and earnings estimates at $986 million and $2.95 per share, respectively, noting that the revenue figure implies a 23% sequential increase. For the September quarter, the firm models revenue of $1.13 billion, reflecting expectations for continued sequential growth into the next quarter.
Supply signals, product ramps and market scope
Analyst Vijay Rakesh pointed to vigorous demand for indium phosphide, or InP, and ramps in key laser and optical products as central to the positive stance. The note states that the outlook from primary InP suppliers - AXT, Landmark and Sumitomo Electric - "could imply potential upside to LITE's SepQ estimates," citing their strong near-term performance and capacity expansions.
Mizuho emphasized Lumentum's leadership across a total addressable market it estimates at more than $90 billion. The firm described Lumentum's role in what it termed the "Photonic AI DC Transformation," citing EML leadership, growing optical circuit switches that could expand to a greater than $10 billion long-term TAM with a key customer ramping at Google, and demand for co-packaged optics.
On margins, Mizuho reported that it sees a line of sight to gross margins above 50% for Lumentum, consistent with the firm's view of improving product mix and scale benefits as ramp activities progress.
Valuation and performance context
Rakesh noted that Lumentum's shares have risen roughly fourfold since November 2025 but are about 27% below their peak, compared with a smaller decline in the SOX index. He added that he would buy into earnings "with strong 2H26E momentum." The $1,100 price target equates to 33 times fiscal 2028 estimated earnings and implies a 0.4 times PEG based on Mizuho's estimates.
Key points
- Mizuho reaffirmed an Outperform rating and a $1,100 price target on Lumentum Holdings ahead of its fiscal fourth-quarter report on Aug. 11.
- The firm maintained June-quarter forecasts of $986 million in revenue and $2.95 in EPS, and projects $1.13 billion for the September quarter, driven by InP demand and product ramps.
- Mizuho highlighted Lumentum's positioning in the so-called Photonic AI data center transformation and sees potential for gross margins above 50% as key product lines scale.
Risks and uncertainties
- Near-term results depend on the ability of InP suppliers and Lumentum's internal ramps to deliver the expected production increases - any disruption in supplier performance or capacity ramp timing could affect revenue - this impacts the semiconductor and optical components sectors.
- Valuation sensitivity - the $1,100 target is tied to future fiscal 2028 earnings estimates; downward revisions to those estimates would alter the implied multiple and PEG - relevant to equity markets in optics and semiconductors.
- Customer ramp timing - the pace at which key customers scale optical circuit switches and co-packaged optics demand will influence the size and timing of the expected TAM expansion, affecting demand projections for data center optics and photonics components.
Investors will be watching Lumentum's Aug. 11 fiscal fourth-quarter report for confirmation of the supplier signals and product ramp momentum Mizuho cites.