Latest Goldman Sachs rating...8 Jun 2019 14:35
06/07/19 Goldman Sachs analyst Rod Hall reiterated a Buy rating and $69.00 price target on Lumentum (NASDAQ: LITE) after assessing a worst case earnings scenario that assumes 100% of Huawei related revenues are lost and Apple’s iPhone volumes end up being 20% lower than his below consensus estimates.
The analyst stated "This downside scenario implies Lumentum would likely deliver about $3.27 in FY (to June) EPS which implies a current forward trading PE of 13.2x vs. a recent historical median PE
of 12.3x". "While acknowledging that a range of outcomes may exist outside our analysis, we highlight that even in our most bearish scenario, the implied PE multiple is ~13x at current trading levels. This compares to Lumentum’s median multiple of ~16x since it started trading in 2015, and 2.3x since 2018. We also flag again that we see our most bearish scenario as unlikely, given at least some ROADM revenue is replaceable and iPhone unit weakness is already built into our model. In our note published on May 20 we estimated ~34% of Huawei revenue is replaceable in our central case".