11:05 AM EDT, 08/13/2025 (MT Newswires) -- Lumentum ( LITE ) is set to achieve its growth targets two to three quarters earlier than expected, mainly due to higher demand for its chip and module products, BofA Securities said in a note Wednesday.

The analysts said that the company is now likely to reach its medium-term revenue run-rate of $600 million per quarter in H1 2026, and the longer-term target of $750 million per quarter around a year later, in H1 2027.

Under relatively new leadership, Lumentum ( LITE ) is returning to its optical component roots while managing its lower-margin optical transceiver business. As a result, the company is on a faster path to meeting or exceeding its 40% gross margin target, BofA said.

Key growth drivers contributing to the earlier achievement of the $600 million per quarter milestone include the datacom chip segment, where shipments of electro-absorption modulated lasers nearly doubled year-over-year in June. Cloud module sales also grew 50% quarter-over-quarter, the analysts said.

To reach the $750 million per quarter goal, further growth will come from optical circuit switches and co-packaged optics, both of which have seen accelerated development timelines and are expected to boost margins to 41% to 42%, they added.

The analysts said they raised their full-year 2026 and 2027 pro forma earnings per share estimates to $4.86 and $6.92, respectively, up from previous estimates of $3.87 and $4.88.

BofA upgraded Lumentum ( LITE ) to neutral from underperform and raised its price target to $135 from $78.

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