Bernstein keeps Outperform on Lumentum and Coherent as CPO timeline debate intensifies

Bernstein said in an Oct. 12, 2026 report that investors remain split on when co-packaged optics, or CPO, can reach volume production, with skepticism building around a 2028 ramp. The firm argued that the delay risk may now be overpriced and pointed to near-packaged optics, or NPO, as a potential fallback that could be ready in 2027. It kept Outperform ratings on both Lumentum and Coherent. The report described a market split between long-only investors, many of whom are still on the sidelines, and hedge funds, which are actively debating whether CPO or NPO will drive the next phase of scale-up optics. Bernstein also flagged rising competitive pressure in Asia, especially from China, while saying Lumentum and Coherent still retain an edge through their positions in high-power lasers. Bernstein set price targets of $1,220 for Lumentum and $350 for Coherent. It forecast 2027 EPS of $22.40 for Lumentum and $9.51 for Coherent, corresponding to forward P/E multiples of 49.3x and 32.9x, respectively. The firm added that optical circuit switching is drawing attention as well, estimating the addressable market at roughly $6 billion, though it said the growth path remains uncertain.