Stifel downgrades Lumentum stock rating on Marvell deal terms

Raymond James upgraded Lumentum (LITE) to Strong Buy, raising its price target to $1,328. The firm believes the market reaction to Lumentum's pre-announcement and Marvell acquisition was overdone. Lumentum reported Q1 2027 revenue of $1.26B and EPS of $4.57, beating guidance. The company agreed to merge with Marvell in an all-stock deal, with analysts citing both potential benefits and risks.

Marvell Technology Inc. will acquire Lumentum Holdings Inc. in an all-stock deal valued at $115bn, with Lumentum shareholders receiving 4,500 Marvell shares per Lumentum share. The combined company aims to expand its total addressable market to $550bn, leveraging complementary technologies in optical and semiconductor solutions for AI infrastructure. The transaction is expected to close in the first half of 2028, subject to regulatory and shareholder approvals.

Marvell (MRVL) shares fell 6.82% to $183 on November 2 after announcing a $115B deal to acquire Lumentum. The transaction, expected to close in 2028, would expand Marvell's optical connectivity business and is projected to boost earnings per share and generate $1B in annual cost savings. Existing Marvell shareholders would own 67% of the combined company, with the deal's success hinging on integration and cost savings delivery.

Lumentum (LITE) reported strong Q1 2027 results, with revenue up 136.5% YoY to $1.26B and EPS of $4.57. The company agreed to be acquired by Marvell (MRVL) in an all-stock deal valued at $115B. Both stocks fell, with LITE down 14.9% and MRVL down 9.5% as of midday ET. The deal is expected to close in H1 2028, pending regulatory approval.

Marvell Technology (MRVL) is acquiring Lumentum for $115 billion, highlighting demand for optical hardware in AI data centers. Both companies are backed by Nvidia and supply components for AI chip data transfer, expanding Nvidia's reach in the semiconductor industry.

Marvell Technology (MRVL) will acquire Lumentum Holdings (LITE) in an $115 billion all-stock deal, aiming to expand in AI data center connectivity. Both companies trade at high valuations, 44x and 35x earnings, respectively. The merger seeks to combine electrical and optical technologies for broader customer offerings and potential synergies.