Citigroup initiated coverage of Lumentum Holdings on Tuesday with a buy rating on views the fiber-optic device maker could make news at two upcoming industry conferences. Lumentum stock has surged 58% in 2025.
While Lumentum still sells fiber-optic devices to telecom companies, its new growth engine have been internet giants and cloud computing service providers. They're deploying clusters of artificial intelligence computer servers in data centers that require faster optical communications.
Citi analyst Atif Malik set a price target of 165 on Lumentum stock. In premarket trades on the stock market today, Lumentum stock slid more than 2% to 129.33.
"We see Lumentum being well on track to outpace both company and Street's longer-term expectations with the ramp of its industry leading EML (externally-modulated lasers) and its new AI products in emerging markets," Malik said in a report. "We consider Lumentum as a primary beneficiary of the AI accelerators ramp as it provides the key EML used in most AI data transceivers."
He added: "We expect the ECOC and OCP conferences to be the next catalysts for the stock. We see Lumentum's 200-gigabit EML technology's adoption as a key topic at ECOC and believe the OCP's recently announced optical circuit switching project led by Lumentum will further shed light on OCS being a viable AI spine switch option versus packet switches."
Further, Lumentum has been a consolidator in the fiber-optic components industry. And it sells Apple optical components used in iPhones.
Lumentum Stock Technical Ratings
Meanwhile, IBD's Telecom-Fiber Optics group ranks No. 9 out of 197 groups tracked. Hanover, Md.-based Ciena, which belongs to the group, reports earnings on Thursday.
Meanwhile, Lumentum stock holds an Accumulation/Distribution Rating of A-minus, according to IBD Stock Checkup. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading. A+ signifies heavy institutional buying; E means heavy selling. Think of a C grade as neutral.
Also, Lumentum stock holds a best-possible IBD Composite Rating of 99. IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
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