LTRX · Lantronix
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $5.65
Note written ·
How this view changed
- · Rating cut from Medium to Low. The note's kill line was crossed, 10 November 2026: Lantronix shares closed at $4.39 on 10 November 2026, below the published $5.18 kill line, in the first session after a fiscal first-quarter 2027 revenue and earnings beat.
- · Rated Medium. Results, 9 November 2026: Fiscal Q1 2027 revenue of $32.369M and non-GAAP EPS of $0.05 beat estimates, non-GAAP gross margin rose to 45.3%, and fiscal Q2 revenue was guided to $32.5-34.5M versus a $33.25M estimate.
Price against the kill line
23.4% 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 $5.65, on record since 11 November 2026. The shares are down 34.9% 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 $5.65, the 4 November 2026 close, which would show the shares had recovered the entire post-report fall and were leading again; or fiscal Q2 2027 revenue above the $34.5 million top of guidance.
Research onlyNot in the portfolio.
Key figures from the filings · Technology
Quarter to 30 September 2026, filed 9 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 32.4
- Revenue, change on a year (%)
- +8.6
- Gross margin (%)
- 44.8
- Operating margin (%)
- −1.7
- Free cash flow, four quarters ($M)
- 3.1
- Net cash, cash less debt ($M)
- 46.7
- Enterprise value to sales (×)
- 1.3
- Free-cash-flow yield (%)
- 1.5
All filed numbers
What Lantronix 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 ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 32.4 | +8.6 | 44.8 | −1.7 |
| first filed | 31.2 | +8.0 | 43.7 | −1.3 |
| first filed | 30.2 | +5.9 | 43.1 | −3.7 |
| first filed | 29.8 | −4.5 | 43.6 | −3.6 |
| first filed | 29.8 | −13.4 | 44.8 | −5.1 |
| first filed | 28.8 | −41.2 | 40.0 | −10.9 |
| Pre-tax income ($M) | −0.3 |
| Net income ($M) four quarters: −3.2 | −0.5 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +19.3 |
| Operating cash flow ($M) | 3.8 |
| Capital spending ($M) | 0.6 |
| Free cash flow ($M) | 3.1 |
| Cash and short-term investments ($M) | 51.5 |
| Debt ($M) non-current long-term debt plus current maturities | 4.8 |
| Net cash, cash less debt ($M) | 46.7 |
| Deferred revenue ($M) +1.5% on a year | 5.7 |
| Backlog, orders not yet delivered ($M) | 1.5 |
| Receivables ($M) | 28.9 |
| Inventory ($M) | 31.2 |
| Shareholders' equity ($M) | 119 |
| Market value ($M) | 203 |
| Enterprise value, market value plus net debt ($M) | 157 |
| Enterprise value to sales (×) | 1.3 |
| Enterprise value to operating income (×) | Not meaningful |
| Price to earnings (×) | Not meaningful |
| Price to book value (×) | 1.7 |
| Free-cash-flow yield (%) | 1.5 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 5.2% of shares outstanding sold short, 3.6 days of average trading to cover, −7.5% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $78K | $0 |
| 12 monthsfrom | $78K | $90K |
The thesis
Lantronix shares are more likely to lag the S&P 500 over the next three months. Investors sold the stock hard on 10 November 2026 even though the fiscal first-quarter 2027 report beat estimates, and nothing in the report showed the drone business doubling as promised. A disclosed unmanned-systems revenue figure, a named Spotter customer and the fiscal second-quarter report, expected in February 2027, settle whether that changes.
The $5.18 kill line was crossed on 10 November 2026, when the shares closed at $4.39, down from $5.45 on 9 November 2026. That level was the price the chief executive paid for shares on 9 September 2026. The crossing showed that a beat on revenue, earnings and guidance was not enough to lift the shares. The rating is Low because the call that the shares would lead failed its own test the first session after the report.
The price already reflects deep doubt. The close of $4.73 on 11 November 2026 is 45.9% below the 52-week intraday high of $8.75 set on 28 May 2026, and less than half of Canaccord Genuity's $10.50 target, which the firm cut from $11.00 on 11 November 2026 while keeping a Buy rating (MarketBeat).
Bullish and bearish views on Lantronix, Inc.
The bull case on Lantronix, Inc. (LTRX), in brief: the quarter beat on every headline line. The bear case: the drone number is still missing.
Bull case
- The quarter beat on every headline line. Revenue of $32.369 million topped the $31.985 million estimate, and non-GAAP earnings (which exclude items such as stock compensation) of $0.05 per share topped $0.04 (Benzinga, 9 November 2026). Non-GAAP net income rose about 50% to $2.2 million.
- Embedded products are growing fast. Embedded IoT Solutions revenue rose 36.7% from a year earlier to $15.7 million in the quarter ended 30 September 2026, per the company's 9 November 2026 release. The Open-Q modules and the drone boards sit in this segment.
- Software revenue is climbing. Software and Services revenue rose about 40% to $2.6 million in the same quarter, helped by an acquired industrial IoT tracking business (Panabee, 9 November 2026).
- The next-quarter guide sits above estimates. Lantronix guided fiscal Q2 2027 revenue to $32.5–34.5 million and non-GAAP earnings to $0.04–0.06 per share, against estimates of $33.25 million and $0.04 (Benzinga, 9 November 2026). Management reaffirmed double-digit revenue growth for fiscal 2027.
- Analysts held their ratings after the fall. Canaccord kept a Buy rating on 11 November 2026, and MarketBeat counted six Buy and two Sell ratings with a $10.70 consensus target that day.
Bear case
- The drone number is still missing. Call coverage gave no unmanned-systems revenue figure for the quarter and no named customer (Motley Fool, 10 November 2026). Fiscal 2026 unmanned revenue was $12.6 million, so the more-than-$25 million fiscal 2027 target rests on the second half of the year.
- The older business is shrinking. IoT System Solutions revenue fell 14.5% from a year earlier to $14.1 million in the quarter ended 30 September 2026. The company blamed tough comparisons with prior-year carrier shipments.
- Inventory is absorbing cash. Inventory rose about 21% from the June quarter to $31.2 million as the company bought ahead of memory and system-on-module shortages, and operating cash flow was negative $2.5 million against $3.6 million positive a year earlier (Panabee, 9 November 2026).
- GAAP earnings remain negative. The GAAP net loss was $463 thousand, or $0.01 per share, in the quarter. Fiscal 2026 showed a GAAP loss of $0.10 per share.
- The market rejected the beat. The close of $4.39 on 10 November 2026 was the 52-week closing low, set the session after the report. Canaccord's target cut on 11 November 2026 was the first analyst move after the results.
Price setup
The shares closed at $4.73 on 11 November 2026, up from the 52-week closing low of $4.39 a session earlier. Before the report they had already slid from a close of $5.00 on 5 November 2026 to $5.45 on 9 November 2026, then fell to $4.39 on the first session of trading on the results.
The last close sits below both the 50-day moving average of $5.99 and the 200-day moving average of $6.05, as of 11 November 2026. The shares are down 22.3% over three months, from $6.09 on 13 August 2026. The chief executive's open-market purchase price of $5.18 on 9 September 2026 now sits above the market.
Insider filings since the report show no open-market sales. Five directors exercised 8,541 options each on 2 November 2026, and the chief executive received a 156,752-share award on 1 November 2026 with 76,259 shares withheld for tax at $6.01 (SEC Form 4 filings). MarketBeat put the market value at $227.84 million on 11 November 2026.
Catalysts ahead
- ~31 December 2026 (est.): Spotter drone and robot autonomy board availability, per the company's calendar Q4 2026 timing. First shipments or a named customer would be the first direct evidence that the drone pivot is turning into revenue, which the 9 November 2026 report did not show.
- ~February 2027 (est.): Fiscal Q2 2027 earnings report. Tests revenue against the $32.5-34.5 million guide and shows whether the second-half drone ramp toward the $25 million-plus fiscal 2027 target has started.
What would change the view
A daily close above $5.65, the 4 November 2026 close, which would show the shares had recovered the entire post-report fall and were leading again; or fiscal Q2 2027 revenue above the $34.5 million top of guidance.
The line before it, a daily close below $5.18 set on 10 November 2026, was crossed on 10 November 2026: the shares closed at $4.39.
What it trades with
Lantronix trades with small-cap defense-technology and industrial IoT hardware names. Its drone business overlaps with other makers of Blue UAS-listed (Pentagon-approved) components, and its Qualcomm-based modules tie it to Qualcomm's edge-AI roadmap. Memory-chip pricing is a direct cost input, which the 9 November 2026 inventory build showed. US policy on foreign-made drone parts drives demand for its NDAA-compliant (National Defense Authorization Act) products.
The evidence, claim by claim (8)
- Fiscal Q1 2027 net revenue was $32.369M, up about 8% year over year, against a $31.985M analyst estimate; non-GAAP EPS was $0.05 against a $0.04 estimate. Lantronix fiscal Q1 2027 results release; Benzinga · as of
- Fiscal Q2 2027 guidance is revenue of $32.5-34.5M and non-GAAP EPS of $0.04-0.06, against estimates of $33.25M and $0.04. Lantronix fiscal Q1 2027 results release; Benzinga · as of
- Embedded IoT Solutions revenue rose 36.7% year over year to $15.7M; IoT System Solutions fell 14.5% to $14.1M; Software and Services rose about 40% to $2.6M. Lantronix fiscal Q1 2027 results release · as of
- Inventory rose about 21% sequentially to $31.2M; operating cash flow was negative $2.5M versus $3.6M positive a year earlier. Lantronix fiscal Q1 2027 results release, via Panabee · as of
- Non-GAAP gross margin was 45.3%; GAAP net loss was $463 thousand, or $0.01 per share; non-GAAP net income was $2.2M. Lantronix fiscal Q1 2027 results release · as of
- No unmanned-systems revenue figure or named drone customer was given on the fiscal Q1 2027 call. Motley Fool, Lantronix call takeaways · as of
- Canaccord Genuity cut its Lantronix price target to $10.50 from $11.00 and kept a Buy rating; MarketBeat consensus target was $10.70. MarketBeat, 11 November 2026 · as of
- Fiscal 2026 unmanned-systems revenue was $12.6M; the fiscal 2027 outlook is $25M-plus, 15-20% of total revenue. Lantronix Q4 FY2026 earnings release and call · as of
Sources
- Lantronix Reports Fiscal First-Quarter 2027 Financial Results · globenewswire.com ·
- Lantronix (NASDAQ:LTRX) Price Target Cut to $10.50 by Analysts at Canaccord Genuity Group · marketbeat.com ·
- Lantronix Q1 Revenue Up 8% to $32 Million as Non-GAAP Net Income Jumps 50% · panabee.com ·
- Lantronix: 3 Key Takeaways for Long-Term Investors · fool.com ·
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