nLIGHT (LASR) Could Be 20% Undervalued On The Back Of The JLWS Award
Why the JLWS award matters for nLIGHT stock
nLIGHT (LASR) has drawn fresh attention after being selected for the Joint Laser Weapon System OTA agreement, an award that starts at US$44 million and could reach up to US$627 million.
See our latest analysis for nLIGHT.
The JLWS award has arrived after a strong share price run for nLIGHT, with the stock showing an 88.79% year to date share price return and a very large 271.49% 1 year total shareholder return, although the 1 day move slipped 3.71% following the announcement.
If the JLWS news has you looking beyond a single defense-focused stock, this could be a good moment to scout other potential beneficiaries of rising demand for advanced laser and sensing hardware via our robotics and automation stocks screener, starting with 33 robotics and automation stocks.
nLIGHT now trades about 25% below the average analyst price target after a very strong 1 year run, while the company is still reporting losses. Is that discount a genuine opportunity, or a signal that the market’s caution is warranted?
Most Popular Narrative: 20.1% Undervalued
The most followed narrative on nLIGHT compares a fair value of $90.71 to the last close of $72.44, and frames the JLWS award inside a bigger defense and manufacturing story.
The rapid growth and expanding pipeline in aerospace and defense, particularly around high-power laser solutions (e.g., HELSI-2 program, DE M-SHORAD, Golden Dome initiative, and increased directed energy orders internationally), positions nLIGHT to benefit from rising global defense spending and modernization, supporting strong multi-year revenue growth.
Want to see what is really backing that higher fair value for nLIGHT? The narrative focuses on revenue expansion, margin uplift, and a punchy future earnings multiple that is far from ordinary.
Result: Fair Value of $90.71 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, there are still real swing factors for this nLIGHT story, including its heavy reliance on defense budgets and execution risks as amplifier products scale up.
Find out about the key risks to this nLIGHT narrative.
Another View: What nLIGHT’s Sales Multiple Is Telling You
The analyst narrative presents nLIGHT as roughly 20.1% undervalued based on a fair value of $90.71, but the market’s own pricing sends a very different signal. At a P/S of 14.1x versus a US Electronic industry average of 2.8x and a peer average of 2.3x, nLIGHT trades on a very rich revenue multiple compared with both its sector and closer comparables. Even relative to a fair ratio estimate of 3x, this valuation suggests the market could shift to a much lower sales multiple over time. Investors may therefore want to consider how comfortable they are with paying this kind of premium for a company that is still loss making.
See what the numbers say about this price — find out in our valuation breakdown.
Next Steps
Given the mix of optimism and caution around nLIGHT, now is a good time to review the numbers for yourself and move quickly. To weigh the upside against the potential downside in one place, start with the 2 key rewards and 2 important warning signs.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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