WEBULL
WebtradeDownload

Why Lumentum Holdings Stock Soared 8.2% Today

The Motley Fool · 1d ago

Key Points

  • Lumentum Holdings' stock dropped 8.3% last week.

  • StoneX initiated coverage on Lumentum stock today.

  • Shares of Lumentum are trading at a premium to their historical valuation.

After dropping 8.3% last week, Lumentum Holdings (NASDAQ:LITE) stock is starting the last week of October trading on an auspicious note. With a financial services firm initiating coverage and taking a bullish stance on the developer of optical and photonic technologies, investors have found sufficient grounds to click the buy button.

Lumentum shares closed 8.2% higher from their closing price on Friday, Oct. 23.

Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »

A person in an office smiles.

Image source: Getty Images.

Another firm sees ample room for this tech stock to run

Initiating coverage with a buy rating, StoneX set a $1,200 price target on Lumentum stock this morning. According to Thefly.com, the financial services firm based its outlook, in part, on management's acknowledgment that it has AI-related optoelectronic capacity that is effectively committed into the early part of 2029.

Based on Lumentum’s closing price of $756.17 on Oct. 23, the StoneX price target implies 59% upside.

On Oct. 20, Jefferies also adopted a more bullish perspective on Lumentum stock, raising its price target to $1,250 from $1,200.

In addition to AI computing, Lumentum develops optical and photonic technologies that support the networks and infrastructure for cloud computing and other advanced communications.

Is Lumentum stock a buy now?

While StoneX sees Lumentum stock soaring in the coming months, investors would be smart to take a more cautious approach to the tech stock and not rush out to load up on shares. Lumentum stock is changing hands at 54.1 times operating cash flow, a premium to its five-year average cash flow multiple of 15.4.

For those interested in Lumentum stock, it will be important to see whether the company meets its first-quarter 2027 guidance -- revenue of $1.23 billion to $1.28 billion and adjusted diluted net income per share of $4.05 to $4.35 -- and then reevaluate whether buying shares is a smart move.

Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Jefferies Financial Group and Lumentum. The Motley Fool has a disclosure policy.