Lumentum Holdings Inc

LITE: XNAS (USA)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
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We Are Launching Coverage of Lumentum Holdings With a $46 Fair Value Estimate and No-Moat Rating

Alex Zhao

Mar 30, 2017

We are launching coverage of Lumentum Holdings with a $46 fair value estimate and no moat rating and stable moat trend. Despite Lumentum’s domain expertise in optical communications components that face robust demand, the firm has not demonstrated a proven ability to earn excess returns on capital due to sporadic purchasing pattern from customers and a fragmented market structure. 3-D sensing in consumer electronics could provide a windfall in revenue, but the laser diode business is quickly becoming crowded in anticipation of upcoming demand and we don't think Lumentum can carve out an economic moat in this business.

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Lumentum Holdings Inc

We Are Launching Coverage of Lumentum Holdings With a $46 Fair Value Estimate and No-Moat Rating

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