10 Worst Affordable Tech Stocks to Buy According to Short Sellers

5) Lumentum Holdings Inc. (NASDAQ:LITE)

Short % of Float (As of 30 August 2024): 17.87%

Forward P/E as of 23 September 2024: 17.85x

Lumentum Holdings Inc. (NASDAQ:LITE) is engaged in manufacturing and selling optical and photonic products in the Americas, the Asia-Pacific, Europe, the Middle East, and Africa.

Short sellers opine that customer demand is expected to remain weak, which might impact its overall financial performance. Since Lumentum Holdings Inc. (NASDAQ:LITE)’s costs are highly fixed, mainly because of manufacturing capabilities, the decline in revenue might impact its EBITDA margins. The short sellers have also highlighted the tough environment in the optical components industry. The challenges in the cloud and networking segment and the industrial tech segment (because of weak end market demand), might weigh over its performance. Moreover, the tech business of Lumentum Holdings Inc. (NASDAQ:LITE) might be pressured because of customer inventory adjustments.

On the other hand, Wall Street analysts believe that Lumentum Holdings Inc. (NASDAQ:LITE)’s business is expected to be aided by investments in new cloud and Al opportunities, which should significantly elevate its cloud business. Moreover, Lumentum Holdings Inc. (NASDAQ:LITE) continues to see a substantial rise in orders for Datacom chips and it is actively expanding its customer base in the data center market. Collectively, these factors are expected to mitigate the short-term challenges.

Lumentum Holdings Inc. (NASDAQ:LITE) has been focusing on scaling up its production capacity. It continues to focus on new technologies such as optical switching and high-density optical links. Moreover, market experts expect significant growth in 2026 and 2027, mainly in cloud business.

Analysts at Rosenblatt Securities upped their price objective on the shares of Lumentum Holdings Inc. (NASDAQ LITE) from $65.00 to $69.00, giving a “Buy” rating on 15^th August. Insider Monkey’s 2Q 2024 revealed that the company was in the portfolios of 32 hedge funds.