A - Why Lumentum Stock Popped on Friday
2023-12-22 13:57:56 ET
Shares of optical communications equipment and laser maker Lumentum (NASDAQ: LITE) were up by 3% as of 1:53 p.m. ET on Friday after Craig-Hallum analyst Richard Shannon upgraded the stock to buy. Shannon assigned Lumentum a new and improved price target of $65 as well, up 35% from his previous target.
Lumentum's business has "strong exposure" to the telecom sector, notes Shannon. (That is a bit of an understatement: According to data from S&P Global Market Intelligence , optical communications sales accounted for 88% of its $1.8 billion in revenues last year.) And Shannon is predicting that the telecom industry's cycle will bottom out in 2024 as data transfer needs for cloud computing and AI begin to outstretch the existing capacities of data networks.
On top of this, Shannon argues that the potential for the Fed to cut interest rates in 2024 could be a tailwind for the stock. Small caps like Lumentum (which has a $3.5 billion market capitalization) have already been rallying on the prospect. Lumentum is up by 47% over the last two months.
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Why Lumentum Stock Popped on Friday