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Lumentum shares soar 14% on Q4 beat, strong guidance amid datacom strength

Published 14/08/2024, 21:18
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SAN JOSE, Calif. - Lumentum Holdings Inc . (NASDAQ:LITE) saw its shares surge more than 14% in premarket trading Thursday after the optical and photonic products manufacturer reported better-than-expected fiscal fourth-quarter results and issued upbeat guidance.

The company posted adjusted earnings per share of $0.06, beating analyst estimates of $0.02. Revenue came in at $308.3 million, surpassing the consensus forecast of $301.14 million. However, revenue was down 16.9% YoY from $370.8 million in the same quarter last year.

"We exceeded our guidance midpoints for both revenue and EPS in the fourth quarter," said Alan Lowe, President and CEO of Lumentum. "We booked record orders for datacom chips used in data center applications and saw emerging positive trends in the broader traditional networking market."

Following the report's release, Stifel analysts reiterate a Buy rating on the stock, highlighting Lumentum's progress on its datacom strategy.

"We have pointed to an increasing number of data points through the June quarter earnings season that indicate that the worst is behind relative to the significant slowdown in
traditional telco service provider spend for more than a year," they said.

For the first quarter of fiscal 2025, Lumentum expects revenue between $315 million and $335 million, above analyst projections of $311.4 million. The company also forecast adjusted EPS of $0.07 to $0.17, compared to the $0.12 consensus estimate.

The strong results and outlook come despite ongoing challenges in the optical components industry. Lumentum's non-GAAP gross margin contracted to 32.2% in Q4 from 36.7% a year ago.

Looking ahead, Lowe said the company is "making significant progress executing our strategy to broaden our cloud and AI customer base, which will lead to accelerated growth in calendar year 2025."

According to JPMorgan analysts, with clearer communication on the growth strategy in the Cloud and Networking segment, Lumentum has strengthened investor confidence in its previous goal of reaching a $500 million quarterly revenue run rate by the end of CY25.

"We update our revenue growth estimates to reflect increased confidence in the company’s guidance of a $500 million revenue run rate exiting CY25, and model a sequential ramp in margins from the F1Q trough (~1.5%) through FY25 and beyond as volumes increase," they wrote. 

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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