Lumentum Holdings Inc.

Lumentum Holdings delivered a strong result in the last quarter and managed an all-around beat. The recent closure of the two acquisitions further strengthens the Optical communications business of the company. Lumentum has a comprehensive product portfolio in the photonic industry to serve its cloud data and network center customers. For network infrastructure, the company continues to see strong fundamental demand drivers. This quarter reported strong demand from customers. The capabilities and products of the company are quite well aligned with the telecommunication market inflections. Lumentum recently announced that the company has expanded its advanced R&D and manufacturing operations in Slovenia’s Škoflijica for specialty fibers. The company is now in an excellent position to capitalize on its strength in Optical Communications. Overall, the demand for the Telecom products of Lumentum remains strong, particularly in edge networking applications. It also saw growth in revenues from coherent components for high-speed line cards and coherent modules, tunable items for edge networking applications, narrow-linewidth tunable lasers, and product leadership areas. The company recently closed a new opportunity significantly for pump lasers in areas of satellite communications. We provide the stock of Lumentum with a ‘Hold’ rating and a revision in the target price.