Lumentum(US:LITE) Huachuang Securities·2026-02-06 11:02Investment Rating - The report assigns a strong buy rating for Lumentum (LITE), expecting it to outperform the benchmark index by over 20% in the next six months [32]. Core Insights - Lumentum's FY26Q2 results set a record with total revenue reaching $665.5 million, a year-over-year increase of over 65%, marking the second consecutive quarter of record revenue [3][7]. - Non-GAAP operating margin increased significantly by 1730 basis points to 25.2%, while non-GAAP gross margin reached 42.5%, up 1020 basis points year-over-year and 310 basis points quarter-over-quarter [3][7]. - The company reported a non-GAAP earnings per share of $1.67, exceeding expectations, with cash and short-term investments totaling $1.16 billion [3][7]. Revenue Breakdown - Component Business: Revenue was $443.7 million, with a quarter-over-quarter increase of 17% and a year-over-year increase of 68%. The growth was driven by significant demand for laser chips and components, particularly for cloud transceiver customers [8]. - System Business: Revenue reached $221.8 million, reflecting a 43% quarter-over-quarter increase and a 60% year-over-year increase, primarily contributed by cloud transceiver business [9]. Business Progress - Cloud Transceivers: The 1.6T product line is advancing beyond expectations, with profitability significantly higher than the 800G products. The company is focusing on reducing design cycles and improving yield to enhance profitability [4]. - Optical Communication Systems (OCS): Orders are coming from multiple clients, with applications across four major scenarios, and expected to continue growing into 2027 [4]. - CPO: The company secured several hundred million dollars in orders for high-power laser chips, with deliveries expected in the first half of 2027 [4]. - Fiber Expansion: Targeting opportunities in data center architecture transformation, with plans to launch large-scale CPO products by the end of 2027 [4]. Earnings Guidance - For FY26Q3, Lumentum expects net revenue between $780 million and $830 million, with a midpoint of $805 million, representing over 85% year-over-year growth [10]. - Non-GAAP operating margin is projected to be between 30% and 31%, with diluted earnings per share expected to be between $2.15 and $2.35 [10].