Short Sellers Are Betting Against Lumentum Stock. Will They Be Proven Right?

• Lumentum (LITE) has surged 340% over the past year, driven by strong technical momentum.
• The stock recently set a new 10-year high.
• Shares maintain a 100% “Buy” opinion from Barchart.
• Analyst sentiment is bullish, with most rating LITE a “Strong Buy” although price targets vary widely.

Today’s Featured Stock

Valued at $27.71 billion, Lumentum (LITE)  is a manufacturer of innovative optical and photonic products. The company’s operating segment consists of Optical Communications and Commercial Lasers. The Optical Communications portfolio includes products used by telecom and datacom nanoelectromechanical systems and traditional as well as cloud/data center service providers. Commercial Lasers products serve its customers in markets and applications, such as manufacturing, biotechnology, graphics and imaging, remote sensing and precision machining.

What I’m Watching

I found today’s Chart of the Day by using Barchart’s powerful screening functions to sort for stocks with the highest technical buy signals; superior current momentum in both strength and direction; and a Trend Seeker “buy” signal. I then used Barchart’s Flipcharts feature to review the charts for consistent price appreciation. LITE checks those boxes. Since the Trend Seeker signaled a new “Buy” on Sept. 26, the stock has gained 130.17%.

Barchart Technical Indicators for Lumentum

Editor’s Note: The technical indicators below are updated live during the session every 20 minutes and can therefore change each day as the market fluctuates. The indicator numbers shown below therefore may not match what you see live on the Barchart.com website when you read this report. These technical indicators form the Barchart Opinion on a particular stock.

Lumentum scored a new all-time high of $401.60 on Dec. 24.

• LITE has a Weighted Alpha of +440.08.
• Lumentum has a 100% “Buy” opinion from Barchart.
• The stock gained 338.95% over the past year.
• LITE has its Trend Seeker “Buy” signal intact.
• The stock recently traded at $377.06 with a 50-day moving average of $275.37.
• Lumentum made 9 new highs and gained 13.88% in the last month.
• Relative Strength Index (RSI) is at 62.58.
• There’s a technical support level around $383.30.

Don’t Forget the Fundamentals

• $27.71 billion market capitalization.
• 824.83x trailing price-earnings ratio.
• Revenue is expected to grow 58.29% this year and another 31.24% next year.
• Earnings are estimated to increase 176.08% this year and an additional 43.89% next year.

Analyst and Investor Sentiment on Lumentum

• Wall Street analysts tracked by Barchart have given 13 “Strong Buy,” 2 “Moderate Buy” and 5 “Hold” opinions on the stock with price targets between $140 and $380 - a very wide range!
• Value Line ranks the stock “Below Average” with a price target of $342 mainly because of the recent price run-up.
• CFRA’s MarketScope Advisor rates the stock as “Strong Buy” with a price target of $450.
• Morningstar thinks with the stock’s recent runup, it’s 54% overvalued.
• 307 investors following the stock on Motley Fool think it will beat the market, while 22 think it won’t.
• 34,750 investors are monitoring the stock on Seeking Alpha, which rates the stock a “Strong Buy.”
• Shorth interest is very high at 17.8% of the float.

The Bottom Line on Lumentum

Wall Street analysts and individual investors agree on Lumentum, but both Value Line and Morningstar plus Big Money short sellers are betting against it.  Big caution signals!

Additional disclosure: The Barchart Chart of the Day highlights stocks that are experiencing exceptional current price appreciation. They are not intended to be buy recommendations as these stocks are extremely volatile and speculative. Should you decide to add one of these stocks to your investment portfolio it is highly suggested you follow a predetermined diversification and moving stop loss discipline that is consistent with your personal investment risk tolerance.

On the date of publication, Jim Van Meerten did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.