On November 3, B. Riley downgraded Lumentum (LITE), a maker of optical communications equipment, to Neutral from Buy and cut its price target to $770 from $1,142. According to Sina Finance, B. Riley said the all-stock acquisition agreement with Marvell Technology limits Lumentum’s share-price upside under the deal terms; based on Lumentum’s latest share price of $684.40, the new target implies about 12.5% upside.
Under the agreement, Marvell will acquire Lumentum in an all-stock deal with an implied enterprise value of about $115 billion, and each Lumentum share will be exchanged for 4.5 Marvell shares. Based on share prices on October 28, the consideration was equivalent to $1,132 per Lumentum share, a premium of about 24% to its unaffected closing price. Because the exchange ratio is fixed, Lumentum shareholders will bear the risk of fluctuations in Marvell’s share price before the deal closes.
B. Riley’s $770 target is based on Marvell’s current share price of about $171 and the 4.5-to-1 exchange ratio. The deal requires approval from Lumentum shareholders and relevant regulators and is expected to close in the first half of 2028. After closing, Lumentum’s existing shareholders are expected to own about 33% of the combined company.