Stock IdeasOct 31, 2026, 12:16 PM ETLumentum Holdings Inc. (LITE) Stock, LUME:CA StockMRVL, MRV:CAHunting Alphas9.48K FollowersSummarySold-out capacity strengthens Lumentum’s pricing power, supporting my forecast for 600–700 bps of gross margin expansion over the next few quarters.Growing adoption of optical connections within and between AI data clusters expands Lumentum’s addressable market, supporting substantial revenue growth.Reported acquisition talks with Marvell make for an M&A catalyst that sectoral transactions' history suggests could carry a 38% premium.Valuation risk is notable as LITE trades at a 38.5x 1-year fwd P/E, 28% above the peer median.Lumentum’s bull flag pattern remains intact, but a breakout has not yet occurred.PashaIgnatov/iStock via Getty ImagesPerformance assessmentLumentum Holdings Inc. (LITE) has underperformed the market a bit since my last update:Elevator pitchThe company reports its Q1 FY27 (corresponding to a Jun-ending fiscal year) on 5 Nov'26. I amThis article was written byHunting Alphas9.48K FollowersHunting Alphas manages a long-only, zero-leverage global equity portfolio through a Self Managed Super Fund. The main portfolio managed is defensive in nature and on a risk-adjusted basis, it has outperformed the market, generating 7.5% annualized alpha, Sortino ratio of 2.0, Information Ratio of 0.67, and low max drawdowns.Hunting Alphas' articles are 5-Minute Stock Pitches that focus on the core stock drivers based on fundamentals, sentiment, valuations, and technical analysis across all types of sectors.Portfolio performance is shared monthly, portfolio holdings disclosed weekly and all the Excel models for the 5-Minute Pitches are shared on the Hunting Alphas website. Note: Hunting Alphas is related to VishValue Research on Seeking Alpha.Analyst’s Disclosure: I/we have a beneficial long position in the shares of LITE either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Comments