Notes from the Road: Tripping the LITE Fantastic

Research evidence excerpt

Notes from the Road: Tripping the LITE Fantastic

TD Cowen Lumentum Holdings

Global Research June 22, 2026

VALUATION METHODOLOGY AND RISKS

Valuation Methodology

Data Networking & Wireline Equipment:

Our valuation methodology is based on Price to Earnings per Share (P/E) and in cases where the

company lacks consistent positive earnings, Enterprise Value to Revenue (EV/Rev). In certain

cases, our valuation is also informed by a discounted cash flow (DCF) analysis.

We make investment recommendations on certain early stage, pre-revenue companies based

upon an assessment of their business model, technology, probability of market success,

and the potential market opportunity, balanced by an assessment of applicable risks. Such

companies may not be assigned a price target.

Investment Risks

(1) rapidly changing/disruptive technology, particularly software defined networking, network

functions virtualization, and virtualization could have an adverse impact on demand and/or

pricing; (2) deterioration in the macro environment both domestically and internationally could

lead to a reduction in enterprise IT spending and service provider capital expenditures with a

consequent adverse impact on Data Networking and Communication Equipment companies’

revenue and valuation multiples; and (3) further consolidation among service providers or

adverse regulatory changes on service providers could lead to a reduction in their capital

expenditures.

Risks To The Price Target

We see the following downside risks to our call:

■ A more material or accelerated downturn in the merchant InP laser market, with a dual

impact on revenues and margins that results in a significant impairment of earnings power.

■ A faster than anticipated shift to co-packaged optics on scale out, creating revenue