Lumentum's finalized acquisition of Oclaro creates a new entity with greater scale in telecom and datacom markets, Barclays' Blayne Curtis said in a research report. The acquisition combines two optical companies into one, erasing the competitive threat the companies posed to each other.
The two companies will accelerate a combined roadmap with a more focused R&D spend and stronger financial profile, the analyst said.
Why It's Important
Lumentum's acquisition of Oclaro is expected to shift its product mix, Raymond James' Simon Leopold said in a note.
As a standalone entity Lumentum's estimated calendar 2019 revenue breakdown is as follows, the analyst said:
- Telecom: 42 percent.
- 3-D: 35 percent.
- Industrial lasers: 13 percent.
- DataCom: 7 percent.
- Other: 3 percent.
As a combined entity, the company's product mix is now likely to look like the following, Leopold said:
- Telecom: 48 percent.
- 3-D: 27 percent.
- DataCom: 13 percent.
- Industrial Lasers: 10 percent.
- Other: 2 percent.
Lumentum's acquisition could generate short-term synergies from SG&A savings as early as calendar 2019, Leopold said. The deal will likely prove to be complementary, with modest overlap, he said.
Raymond James lifted its fiscal 2020 revenue estimates from $1.664 billion to $2.235 billion, while its EPS estimates moved higher from $5.64 to $5.81.
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Latest Ratings for LITE
|Dec 2018||Raymond James||Maintains||Strong Buy||Strong Buy|
|Nov 2018||Morgan Stanley||Maintains||Equal-Weight||Equal-Weight|
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