Lumentum has been elevated to a Zacks Rank #1 (Strong Buy), reflecting analysts’ increasing confidence in the company’s earnings trajectory. The upgrade is largely driven by upward revisions to earnings estimates over the past 30 days, with the consensus forecast for the next quarter EPS rising by 12% since the start of the month. This shift underscores expectations that Lumentum will leverage strength in its optical networking and millimeter-wave product lines to drive further profitability in the second half of its fiscal year.

In fiscal Q2, Lumentum reported non-GAAP earnings per share that soared 297.6% year-over-year, comfortably beating consensus estimates. Revenue climbed 65.5% versus the prior year period, driven by a 58% jump in optical components and a 78% increase in photonic systems sales. Gross margin expanded by 430 basis points to 44.2%, reflecting improved manufacturing efficiencies and favorable product mix. Free cash flow turned positive at $65 million, compared with a $12 million outflow a year earlier.

Following Q2 results, Lumentum issued third-quarter revenue guidance of $415 million to $425 million, above the Street’s previous consensus of $405 million. Non-GAAP EPS guidance was set at $0.88 to $0.92, topping the prior consensus of $0.82. In response, major brokerage firms raised their full-year revenue forecasts by an average of 4% and lifted EPS estimates by nearly 10%. Analysts cited robust order momentum in 5G infrastructure and data center markets as key drivers for the stronger outlook.