Lumentum (LITE) is set to achieve its growth targets two to three quarters earlier than expected, mainly due to higher demand for its chip and module products, BofA Securities said in a note Wednesday.

The analysts said that the company is now likely to reach its medium-term revenue run-rate of $600 million per quarter in H1 2026, and the longer-term target of $750 million per quarter around a year later, in H1 2027.

Under relatively new leadership, Lumentum is returning to its optical component roots while managing its lower-margin optical transceiver business. As a result, the company is on a faster path to meeting or exceeding its 40% gross margin target, BofA said.

Key growth drivers contributing to the earlier achievement of the $600 million per quarter milestone include the datacom chip segment, where shipments of electro-absorption modulated lasers nearly doubled year-over-year in June. Cloud module sales also grew 50% quarter-over-quarter, the analysts said.

To reach the $750 million per quarter goal, further growth will come from optical circuit switches and co-packaged optics, both of which have seen accelerated development timelines and are expected to boost margins to 41% to 42%, they added.

The analysts said they raised their full-year 2026 and 2027 pro forma earnings per share estimates to $4.86 and $6.92, respectively, up from previous estimates of $3.87 and $4.88.

BofA upgraded Lumentum to neutral from underperform and raised its price target to $135 from $78.

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