Needham is bullish on "continuing strong" demand for lasers and has raised its target price. Lumentum (LITE.US) surged 17% in a single day.

Investment bank Needham raised its target price for telecommunications equipment company Lumentum (LITE.US), stating that "demand for lasers remains strong." Analyst Ryan Koontz raised the target price from $235 to $290, reaffirming a "buy" rating for Lumentum and stating that the company is steadily becoming a "key supplier" in the AI optics competition. The stock price surged on Monday, closing up 17.13%. In a report to clients, Needham analyst Ryan Koontz wrote, "Lumentum is confident that its aggressive capacity expansion investments will allow it to maintain its position as the largest commercial laser supplier in the cloud industry. Its indium phosphide, electro-absorption modulated lasers, and continuous wave products continue to face global shortages, with the supply-demand gap in 2026 appearing to be even larger than in 2025. Indium phosphide manufacturing skills are highly specialized on a global scale, with few large-scale suppliers." Koontz explained, "In its data communications segment, production of EML chips for the global transceiver market has been constrained by capacity, a situation expected to continue until the end of 2025. Management cites industry forecasts indicating that the high-speed transceiver market will maintain a compound annual growth rate of over 30% from 2023 to 2028. Its acquired Cloud Light transceiver products have now been shipped to all three mega-scale customers, and Lumentum plans to eventually integrate its internal continuous wave lasers." He continued, "We expect Lumentum to deliver better performance in terms of revenue, profit margins, earnings, and cash flow as its main business segments gain traction, and its stock price should continue to rise."