Over the weekend session’s conclusion, Lumentum Holdings Inc. (NASDAQ: LITE) witnessed an upward trajectory, experiencing a notable 2.91% increase to reach $53.00 per share. This positive momentum was instigated by an upgraded recommendation from an esteemed analyst firm.
Craig Hallum, the analyst firm in question, revised its stance on LITE stock during Friday’s evaluation. The firm, previously endorsing a “Hold” rating, elevated its perspective to a “Buy” status. The catalyst for this shift appears to be recent developments within Lumentum Holdings Inc., which have evidently bolstered analyst confidence.
Lumentum (LITE) recently finalized the acquisition of Cloud Light Technology Limited (“Cloud Light”). This strategic move introduced high-speed optical transceiver products, distinctive technological assets, and a highly skilled team to Lumentum. The cloud operators’ endorsement of this transaction is rooted in the recognition of an augmented customer value proposition.
This augmentation is attributed to cutting-edge technology, an expanded product portfolio, and fortified supply chain security—particularly significant during a period where Artificial Intelligence is pushing data center compute capacity to its zenith.
The merger, executed under predefined terms, involved a transaction value approximating $750 million. This financial outlay was funded through cash from LITE’s balance sheet, coupled with the assumption and substitution of outstanding unvested Cloud Light options.
Projections indicate that this transaction will result in a more than twofold increase in Lumentum’s revenue from cloud data center infrastructure within the 12 months following the transaction’s closure. This amalgamation, marked by its high complementarity, unequivocally positions LITE as a vanguard provider of photonics to cloud operators.
Consequently, it enables a more than fivefold expansion in the company’s addressable market within data centers. Remarkably, over 90% of Cloud Light’s revenue exceeding $200 million in the past twelve months stemmed from 400G and higher-speed products. In the most recent quarter, 800G transceivers contributed to over half of Cloud Light’s optical transceiver revenue.
