Lumentum stock plunges as Rosenblatt downgrades after weak Q3 results
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Lumentum (NASDAQ:LITE) shares tumbled more than 12% in premarket trading on Thursday as investment firm Rosenblatt downgraded the photonic technology company after it negatively pre-announced its third-quarter results.
Analyst Mike Genovese lowered his rating on Lumentum (LITE) shares to neutral from buy and cut the per-share price target to $48 from $77, noting that a large customer of Lumentum (LITE), believed to be Ciena (CIEN), pushed out shipments for inventory management purposes. While the push out was expected, it happened faster-than-expected, Genovese added. 
"LITE says [fiscal fourth-quarter] shipments to this customer will be similar to [fiscal third-quarter], and we think Ciena likely will be reducing inventory through its [fiscal fourth-quarter] in October," Genovese wrote in an investor note. 
Genovese also noted it's possible that Lumentum's (LITE) relationship with Apple (AAPL) has "deteriorated," citing more competition in the consumer 3DS market as the market has gotten stronger.
The analyst said the weakness from Lumentum (LITE) could allow investors to scoop up shares of Extreme (EXTR), Calix (CALX) and Adtran (ADTN) on any weakness, given this group does not have exposure to hyper scalers.
Additionally, while Ciena (CIEN) and Infinera (INFN) have roughly 20% exposure to hyper scalers, Genovese noted fundamentally both companies "seem fine" and he recommends investors buy these companies on "meaningful weakness."
In late February, TF International Securities analyst Ming-Chi Kuo said Apple (AAPL) would replace Lumentum (LITE) in the iPhone 15 Pro with parts from Sony. 
Analysts are largely cautious on Lumentum (LITE). It has a HOLD rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates LITE a HOLD.