Key Takeaways
- Both Coherent and Lumentum shares have retreated over 15% since peaking in early June
- JPMorgan maintains Overweight recommendations with targets of $380 for COHR and $1,130 for LITE
- The decline follows massive gains earlier in 2026 and concerns about co-packaged optics timeline shifts
- Shares currently valued at approximately 25x projected 2028 earnings with expected 40% annual profit growth
- Industry channel feedback from JPMorgan indicates co-packaged optics deployment remains on schedule
During Thursday’s premarket session, Coherent (COHR) traded at $359.05 while Lumentum (LITE) changed hands at $869.06—both optical networking players sitting more than 15% below their early-June highs. JPMorgan analysts view this weakness as an attractive entry point.
In a Thursday research note, the investment bank reaffirmed its Overweight stance on both companies. The firm’s price objectives remain unchanged at $380 for Coherent and $1,130 for Lumentum.
According to analyst Samik Chatterjee, the recent weakness stems from two primary factors. The stocks had already delivered triple-digit percentage returns in early 2026. Additionally, market participants grew concerned about possible postponements in co-packaged optics technology deployment—an innovation aimed at replacing traditional copper connections in data center infrastructure.
Chatterjee observed that “once-lofty optical premiums begin to look more palatable to investors,” suggesting the recent decline has established a more compelling risk-reward profile.
Based on prevailing market prices, both equities currently command valuations around 25 times their estimated 2028 earnings. This multiple appears justified considering JPMorgan’s projection of 40% compound annual earnings expansion for both organizations.
Co-Packaged Optics Deployment Remains On Track
A primary concern weighing on shares was whether co-packaged optics technology might encounter implementation delays. JPMorgan’s analysis challenges this narrative.
Intelligence collected from market participants at last week’s Computex trade show indicates that Nvidia’s optical networking rollout is progressing faster than anticipated, not experiencing setbacks. This finding undermines a key bearish thesis behind the recent selling pressure.
Nvidia (NVDA) continues to represent a critical demand driver in this space. Chatterjee highlighted that Nvidia probably constitutes the bulk of current revenue projections for both Coherent and Lumentum.
Additional Customers Emerging in Optical Market
Beyond Nvidia’s contributions, JPMorgan identified that certain cloud infrastructure providers and alternative purchasers are beginning to participate in the optical networking ecosystem.
According to Chatterjee, these emerging customers “would be additive to current forecasts,” implying that existing earnings estimates haven’t yet incorporated their potential impact. This represents a possible upside driver that investors may currently be underestimating.
Lumentum shares advanced 3.8% in Wednesday’s regular session and added another 1.9% during Thursday’s premarket trading. Coherent climbed 1.2% Thursday following a minor decline in the previous session.
Broader Wall Street sentiment aligns with JPMorgan’s constructive view. Among the more than two dozen research firms monitored by FactSet, 81% assign Buy recommendations to Lumentum while 76% rate Coherent as a Buy.
Both stocks continue to enjoy strong institutional support following their recent correction, with the selloff notably absent of any significant analyst downgrades.
