POET Peer LITE Stock Dips Premarket Despite Earnings Beat — Retail Only Gets More Bullish

• Lumentum reported third-quarter results and issued current-quarter forecasts, all of which were above analysts’ estimates.
• LITE shares declined in Wednesday’s premarket, while rival photonic component maker Poet Technologies’ shares rallied.
• Stocktwits sentiment for LITE shifted to ‘extremely bullish’ from ‘bullish.’

Lumentum Holdings shares fell more than 2% in early premarket trading despite a blowout quarterly report, even as retail traders urged buy positions amid upbeat sentiment around photonic component companies.

Like Poet Technologies, Lumentum is among a group of AI data center component makers that are drawing high interest from investors. LITE stock, which was added to the S&P 500 in March, has gained 170% year-to-date and trades at a record high.

In fact, Poet shares gained 8% in the premarket session. Like Poet, Lumentum designs and makes photonic products, including high-performance lasers and optical components. The company reported third-quarter results and issued current quarter forecasts, all of which were above analysts’ estimates.

In the third quarter, revenue rose 90.1% to $808.4 million, beating estimates of $804.3 million from LSEG/Reuters. Adjusted profit came in at $2.37 per share, compared with estimates of $2.29.

LITE CEO Touts Margin Improvement

“While our top line growth continues to garner headlines, the more impressive part of our recent performance has been our margin expansion. In fiscal Q3, gross margin improved by 540 basis points on quarter and operating margin by 700 basis points,” said President and CEO Michael Hurlston.

“Margin improvement has been driven by many factors including operational rigor, pricing discipline, and product mix. This quarter, mix was aided by strength in laser chips, but also by a less-heralded part of our portfolio, ‘scale-across’ components, which include our pump lasers and narrow linewidth laser assemblies,” he said.

For the fourth quarter, Lumentum expects revenue between $960 million and $1.01 billion, compared with analysts' estimate of $908.3 million, according to data compiled by LSEG.

Adjusted profit is expected to be between $2.85 and $3.05 per share. Analysts expect $2.68.

Retail View On LITE Improves

On Stocktwits, the retail sentiment shifted to ‘extremely bullish’ early Wednesday from ‘bullish’ the previous day, with traders referencing the dip as a classic sell-the-news event following a red-hot rally into the earnings report.

“I'm listening to the $LITE conference call. They can't keep up with demand. They are supply and operations constrained and they are having to to pick and choose who they ship to,” a trader wrote.

Another said: “In short, this all means continued growth and increased revenue and profits across the whole technology stack, not just for LITE, for the foreseeable future…measured in years.”

Ahead of the results, LITE shares had gained for five straight sessions, gaining 26%.

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