LITE · Lumentum Holdings
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $811.60
Note written ·
Price against the kill line
26.5% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $811.60, on record since 11 November 2026. The shares are down 38.4% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $811.60, the 200-day average of closes as of 11 November 2026, would show the shares leading the S&P 500 and prove this call wrong. So would second-quarter fiscal-2027 revenue above the $1.625 billion top of Lumentum's guidance.
Research onlyNot in the portfolio.
Catalyst
Key figures from the filings · Technology
Quarter to 26 September 2026, filed 3 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 1,263
- Revenue, change on a year (%)
- +136.5
- Gross margin (%)
- 51.0
- Operating margin (%)
- 28.5
- Free cash flow, four quarters ($M)
- 356
- Net cash, cash less debt ($M)
- 580
- Enterprise value to sales (×)
- 14.3
- Enterprise value to operating income (×)
- 61.0
All filed numbers
What Lumentum Holdings reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 1,263 | +136.5 | 51.0 | 28.5 |
| first filed | 1,006 | +109.3 | 47.4 | 27.8 |
| first filed | 808 | +90.1 | 44.2 | 21.6 |
| first filed | 666 | +65.5 | 36.1 | 9.7 |
| first filed | 534 | +58.4 | 34.0 | 1.3 |
| first filed | 481 | +55.9 | 33.3 | −1.7 |
| Pre-tax income ($M) | Not reported |
| Net income ($M) four quarters: −6,579 | 360 |
| Diluted shares, change on a year (%) against the quarter to 27 September 2025 | +29.9 |
| Operating cash flow ($M) | 961 |
| Capital spending ($M) | 605 |
| Free cash flow ($M) | 356 |
| Cash and short-term investments ($M) | 1,980 |
| Debt ($M) | 1,400 |
| Net cash, cash less debt ($M) | 580 |
| Deferred revenue ($M) +351.9% on a year | 12.2 |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 100 |
| Inventory ($M) | 808 |
| Shareholders' equity ($M) | 4,573 |
| Market value ($M) | 54,113 |
| Enterprise value, market value plus net debt ($M) | 53,533 |
| Enterprise value to sales (×) | 14.3 |
| Enterprise value to operating income (×) | 61.0 |
| Price to earnings (×) | Not meaningful |
| Price to book value (×) | 11.8 |
| Free-cash-flow yield (%) | 0.7 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 8.5% of shares outstanding sold short, 1.5 days of average trading to cover, +3.9% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $90.5M |
| 12 monthsfrom | $0 | $170.3M |
The thesis
Lumentum Holdings looks more likely to lag the S&P 500 than lead it over the next three months. A fixed 4.500-share all-stock merger ties its price to Marvell Technology's stock more than to Lumentum's own fast growth. Marvell's fiscal third-quarter report on 1 December 2026 is the next test. Lumentum's second-quarter report, expected in early February 2027, follows.
The shares rose 10.7% on 11 November 2026, closing at $648.06 after $585.57 on 10 November 2026. AI stocks rallied that day after CoreWeave's third-quarter results, and Bernstein had raised its target the session before. Even after the rebound, the shares closed below their 50-day and 200-day averages and 26.4% lower than three months earlier.
At Marvell's $168.80 share price, the 4.500 ratio valued Lumentum at $759.60 a share, per 24/7 Wall St on 12 November 2026. The 11 November 2026 close sat 17.2% below that value, so the market prices a real chance that the deal fails or that Marvell falls further. The rating is Low because the deal value still sets the price, and that value depends on a Marvell stock that had its worst three days since 2000 after the announcement (Benzinga, 3 November 2026).
Bullish and bearish views on Lumentum Holdings Inc.
The bull case on Lumentum Holdings Inc. (LITE), in brief: results beat the midpoint of guidance. The bear case: the deal value moves with Marvell's stock.
Bull case
- Results beat the midpoint of guidance. Lumentum reported first-quarter fiscal-2027 revenue of $1,262.6 million on 2 November 2026, up 136.5% from a year earlier, against guidance of $1.225–1.275 billion. Adjusted earnings per share (EPS) of $4.57 beat the $4.05–4.35 guided range.
- Guidance calls for another large step up. The company guided second-quarter revenue to $1.575–1.625 billion, adjusted operating margin to 45.0–46.0% and adjusted EPS to $5.90–6.20, per the 2 November 2026 release. First-quarter adjusted operating margin was 42.3%.
- A second large co-packaged optics win. Chief executive Michael Hurlston said in the 2 November 2026 release that Lumentum won its second major near-package or co-packaged optics program, backed by purchase commitments above $5 billion.
- Systems revenue is scaling fast. The Systems segment, which includes optical circuit switches, reported $508.4 million, up 228.8% from a year earlier, per the 10-Q for the quarter ended 26 September 2026.
- Every post-report target is above the price. Bernstein raised its target to $700 from $635 and kept Outperform on 10 November 2026, while UBS's reduced target is $686. Susquehanna ($950), Rosenblatt ($900), Needham ($800), B. Riley ($770) and TD Cowen ($685) set their targets on 3 November 2026. All sit above the 11 November 2026 close of $648.06.
- The deal carries a break fee. A $3.2 billion fee is payable to Lumentum if the merger fails on regulatory grounds, per 24/7 Wall St on 12 November 2026, citing TIKR.
Bear case
- The deal value moves with Marvell's stock. The 2 November 2026 joint release put the deal at about $1,132 per Lumentum share, a 23.9% premium to the 28 October 2026 unaffected close of $913.95. At Marvell's $168.80, the fixed ratio was worth $759.60 a share, per 24/7 Wall St on 12 November 2026.
- Analysts turned against Marvell. Benzinga reported on 3 November 2026 that Marvell had its worst three days since 2000 after a Bank of America downgrade and a Cantor target cut to $225. Both firms cited the Lumentum deal.
- Lumentum targets keep falling. UBS cut its target to $686 from $960 and kept Neutral on 10 November 2026. Bernstein cut to $635 from $900 on 9 November 2026 before raising it to $700 a day later. B. Riley downgraded to Neutral on 3 November 2026.
- Closing is far off and doubted. The companies expect completion in the first half of calendar 2028, subject to both stockholder votes and regulatory approvals that include China. A 10 November 2026 news report put the deal's odds at 50-50. Morningstar, writing on 29 October 2026 before the signing, put the chance of a completed deal below 50%.
- Lumentum holders now share the upside. Lumentum holders would own about 33% of the combined company and Marvell holders about 67%, per the joint release. Lumentum's operating gains now count for one-third of the combined result.
- Lawsuits are already starting. Class-action firm Monteverde & Associates said on 4 November 2026 that it is investigating the proposed acquisition, per fiscal.ai.
Price setup
Lumentum closed at $648.06 on 11 November 2026. That is 43.3% below the 52-week intraday high of $1,143.00 set on 9 October 2026. The 52-week closing low is $226.86, from 13 November 2025.
The deal announcement drove the shares down from $913.95, the 28 October 2026 unaffected close named in the joint release, to $509.70 on 5 November 2026. Closes since then were $538.59 on 6 November 2026, $596.16 on 9 November 2026, $585.57 on 10 November 2026 and $648.06 on 11 November 2026. The 3-month change is −26.4%, against a close of $880.41 on 13 August 2026.
As of 11 November 2026, the 50-day average of closes was $877.17, and the shares also trade below their 200-day average. Getting back above that 200-day average would require the gap to the deal value to close and Marvell's stock to rise. Insider selling came before the deal: chief financial officer Ali Wajid sold 24,542 shares at $1,048.50 on 1 October 2026. Wupen Yuen, president of global business units, made several September sales at average prices of $864.83 to $947.17. Both used Rule 10b5-1 plans, per SEC Form 4 filings.
Catalysts ahead
- 1 December 2026: Marvell fiscal third-quarter 2027 results and conference call. Marvell's stock sets the value of the fixed 4.500 exchange ratio. Its outlook and any update on the merger timetable bear directly on Lumentum's price.
- ~3 February 2027 (est.): Lumentum second-quarter fiscal-2027 report. Tests revenue against guidance of $1.575–1.625 billion and adjusted EPS against $5.90–6.20. Revenue above the top of the range would show the business pulling the shares ahead of the deal math.
What would change the view
A daily close above $811.60, the 200-day average of closes as of 11 November 2026, would show the shares leading the S&P 500 and prove this call wrong. So would second-quarter fiscal-2027 revenue above the $1.625 billion top of Lumentum's guidance.
What it trades with
Under the fixed 4.500 exchange ratio, Lumentum's price follows Marvell Technology's, plus a discount for the risk that the deal does not close. Both stocks also move with large AI chip names. Benzinga reported that Nvidia, Micron and eight other AI stocks fell below their 200-day averages in the week of 5 November 2026, and that Nvidia entered a bear market on 8 November 2026. The 11 November 2026 rebound came as the wider AI group rallied after CoreWeave's results. Optical maker Applied Optoelectronics also jumped that day. On a broad AI rally, Lumentum's gains come with Marvell's and the group's, which leaves little room for Lumentum's own results to set its price.
The evidence, claim by claim (8)
- Marvell agreed to acquire Lumentum in an all-stock deal at a fixed 4.500 Marvell shares per Lumentum share. The deal implied an enterprise value of $115 billion, about $1,132 per share, and a premium of about 23.9% to the 28 October 2026 unaffected close. Joint press release, Form 8-K exhibit 99.1, 2 November 2026 · as of
- Lumentum holders would own about 33% of the combined company and Marvell holders about 67%; closing is expected in the first half of calendar 2028. Joint press release, Form 8-K exhibit 99.1, 2 November 2026 · as of
- First-quarter fiscal-2027 revenue was $1,262.6 million, up 136.5% year over year, with adjusted EPS of $4.57 and adjusted operating margin of 42.3%. Lumentum first-quarter fiscal-2027 results release · as of
- Lumentum guided second-quarter fiscal-2027 revenue to $1.575–1.625 billion, adjusted operating margin to 45.0–46.0% and adjusted EPS to $5.90–6.20. Lumentum first-quarter fiscal-2027 results release · as of
- At Marvell's $168.80 share price, the 4.500 ratio valued Lumentum at $759.60 per share, 17.2% above Lumentum's $648.06 close. 24/7 Wall St, 12 November 2026 · as of
- UBS cut its Lumentum target to $686 from $960 and kept Neutral. Bernstein raised its target to $700 from $635 and kept Outperform, after cutting it to $635 from $900 a day earlier. Benzinga and Defense World analyst reports, 10 November to 11 November 2026 · as of
- Marvell logged its worst three days since 2000 as Bank of America downgraded the stock and Cantor cut its target to $225, both citing the Lumentum deal. Benzinga, 3 November 2026 · as of
- Chief financial officer Ali Wajid sold 24,542 Lumentum shares at $1,048.50 on 1 October 2026 under a Rule 10b5-1 plan. SEC Form 4 filed 2 October 2026 · as of
Sources
- Lumentum Holdings Inc. - Form 8-K - FY2026 · sec.gov ·
- Lumentum Announces First Quarter of Fiscal Year 2027 Financial Results · investor.lumentum.com ·
- Lumentum Holdings Inc. - Form 10-Q - FY2026 · sec.gov
- Lumentum Trades Below Marvell's Buyout Offer. Is the Gap a Bargain? · 247wallst.com ·
- trading-treff.de ·
- Lumentum (NASDAQ:LITE) Stock Price Up 10.7% After Analyst Upgrade · marketbeat.com ·
- Lumentum (NASDAQ:LITE) Stock Price Target Lowered at UBS Group · defenseworld.net ·
- Lumentum (NASDAQ:LITE) Given New $700.00 Price Target at Sanford C. Bernstein · defenseworld.net ·
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