By Nate Wolf

After a big increase to start the year, optical-networking stocks have been stuck in the mud in June. That makes now a perfect time to buy the dip, according to analysts at J.P. Morgan.

The investment bank reiterated Overweight ratings on Coherent and Lumentum Holdings in a research note Thursday, sticking by its price targets of $380 and $1,130, respectively.

Lumentum jumped 3.8% on Wednesday and was up another 1.9% to $869.06 in premarket trading Thursday. Coherent rose 1.2% to $359.05 on Thursday after finishing down 0.3% the day before.

The two optical-networking names have been trading off more than 15% from their early-June highs. J.P. Morgan chalked up that steep decline to triple-digit percentage gains to start 2026 and worries about delays to the adoption of co-packaged optics -- a technology that would replace copper wiring in data centers.

"With these dynamics driving an outsized pullback in shares, we see a more interesting setup emerging as once-lofty optical premiums begin to look more palatable to investors," wrote analyst Samik Chatterjee.

Both stocks are now trading at around 25 times estimated 2028 earnings, J.P. Morgan pointed out, despite forecasts for annual earnings growth of 40%.

Nvidia's transition from copper to co-packaged optics isn't slowing down, J.P. Morgan said. If anything, feedback from investors at the Computex exhibition last week indicated Nvidia's optics ramp is tracking ahead of schedule.

Meanwhile, select cloud-service providers and other buyers are also joining the optical-networking boom. These new buyers "would be additive to current forecasts in our view," Chatterjee wrote, noting that "Nvidia likely accounts for the majority of existing outlooks."

Both Lumentum and Coherent remain mostly well-liked among analysts. Of the more than two-dozen Wall Street firms tracked by FactSet, 81% rate Lumentum a Buy and 76% have a Buy rating on Coherent.

Write to Nate Wolf at nate.wolf@barrons.com

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June 11, 2026 09:06 ET (13:06 GMT)

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