JPMorgan Maintains Overweight Ratings on Coherent and Lumentum, Citing Pullback as Buying Opportunity
Alina Collins
JPMorgan reiterated Overweight ratings on Coherent and Lumentum with price targets of $380 and $1,130, arguing that a 15%+ pullback from June highs makes valuations more attractive for investors to step in.
What caused this pullback?
Both stocks had already posted triple-digit percentage gains year-to-date, building heavy profit-taking pressure.
The market also fears delays in deploying co-packaged optics (CPO) — a design that places optical modules directly inside the chip package — across data centers.
This means → the selloff is driven by "too much gain" plus "delay fears," not a deterioration in fundamentals.
Where do valuations sit after the drop?
Both stocks now trade at roughly 25× estimated 2028 earnings per share.
JPMorgan forecasts 40% annual earnings growth for each name.
In plain terms = 25× P/E paired with 40% growth means the once-lofty optical premium has shrunk to a more reasonable zone.
Is Nvidia's CPO timeline actually slipping?
JPMorgan says Nvidia's migration from copper cables to CPO has not slowed.
Investor feedback from last week's Computex show indicates Nvidia's optical product ramp is running ahead of its original schedule.
This means → the market's "CPO delay" worry contradicts JPMorgan's on-the-ground intelligence, suggesting the pullback may be an overreaction.
Why do new buyers matter?
Some cloud providers and other buyers are joining the optical procurement pipeline; JPMorgan believes they will deliver incremental upside to existing forecasts.
Nvidia likely accounts for most of the current forecast base, so diversifying demand sources helps reduce single-customer concentration risk.
In plain terms = optical revenue used to lean heavily on Nvidia alone; now the buyer pool is broadening, making the revenue base more stable.
What does the rest of Wall Street think?
Among the 20-plus firms tracked by FactSet, 81% rate Lumentum a buy and 76% rate Coherent a buy.
This reflects a broad Street consensus that still leans bullish on the optical communications theme — JPMorgan is far from alone.
As these factors have driven an outsized pullback in share prices, the once-elevated optical premium is beginning to look more reasonable to investors, and we see a more attractive entry point forming.
Samik Chatterjee
JPMorgan Analyst
(June 11, 2026, research note)
Content is for reference only, not financial advice.