Lumentum Stocks Drop 11% With Merger Risk Overshadowing Its $1.6 Billion Revenue Outlook

Mizuho cut Lumentum's (LITE) price target to $1,132, maintaining an Outperform rating after strong Q3 results and Marvell's (MRVL) acquisition announcement. Lumentum reported $1.26B revenue and $4.57 EPS, beating estimates, and guided Q4 revenue to $1.6B and EPS to $6.05. Marvell will acquire LITE at $1,132 per share, a 65% premium, with $1B in expected synergies. Analysts have mixed reactions to the deal.

Marvell Technology (MRVL) shares fell 10% after announcing an all-stock acquisition of Lumentum (LITE) at a $115B valuation, a 24% premium. Investors worry about the high price, as Lumentum's stock has surged over the past year. Marvell aims to leverage Lumentum's optical laser technology for AI systems, but market sentiment is currently bearish on AI-related stocks.

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.