nLIGHT, Inc. (NASDAQ:LASR) Soars on Defense-Driven Growth as Analysts Revise Estimates Higher

The recent earnings report from nLIGHT, Inc. (NASDAQ:LASR) has ignited investor optimism, with the company not only surpassing expectations but also securing upward revisions in analyst forecasts. The first-quarter 2025 results underscore a strategic pivot toward high-margin defense markets, which now account for 63% of its revenue—a shift that could redefine the company’s trajectory.

The Numbers That Matter

nLIGHT’s Q1 2025 revenue surged to $51.7 million, a 16% year-over-year increase, fueled by a 50.4% jump in Aerospace & Defense (A&D) sales. This segment’s dominance—now two-thirds of total revenue—reflects the company’s success in capitalizing on rising global defense spending. Notably, the A&D segment’s margins expanded to 27%-33%, significantly outperforming its struggling commercial division, which saw revenue drop 16.8%.

The net loss narrowed to $8.1 million, a 41% improvement from Q1 2024, while non-GAAP results showed a $1.9 million net loss, a 78.7% beat on earnings per share (EPS). The company also achieved its first positive Adjusted EBITDA in a year ($116,000), far exceeding expectations of -$5.14 million. These figures signal operational efficiency gains, particularly in supply chain management and cost controls.

Guidance: Aggressive Growth or Overpromising?

Management’s Q2 2025 revenue guidance of $53–$59 million implies a midpoint of $56 million, a 10.9% year-over-year rise. Full-year revenue estimates now sit at $205.63 million, with analysts revising EPS forecasts upward to -$0.51 for 2025—nearly breakeven by year-end. CEO Scott Keeney’s confidence is evident: "We expect sequential revenue growth in Q2 as we continue to ramp defense products," he stated, reinforcing the company’s focus on long-term contracts with defense clients.

Analyst Reactions: Bullish but Cautious

Despite the strong quarter, nLIGHT retains a Zacks Rank #4 (Sell) due to sector-wide challenges in the Electronics - Semiconductors industry, which ranks in the bottom 43% of Zacks sectors. However, post-earnings momentum has been undeniable: the stock climbed 16.1% in aftermarket trading to $10, erasing a 21.9% YTD decline prior to the report.

Analysts now project a 7.8% upward revision in EPS estimates for the next 12 months, with many crediting nLIGHT’s "unique position" in directed energy systems for military applications. One analyst noted, "The defense tailwinds here are real—nLIGHT is positioned to benefit from multi-year contracts that could sustain growth beyond 2025."

Risks on the Horizon

While the A&D segment’s momentum is undeniable, nLIGHT’s commercial division—serving industries like telecommunications and materials processing—continues to lag. Weakness in these markets, combined with a Zacks sector ranking in the bottom quartile, poses headwinds. Additionally, the company’s reliance on government contracts introduces regulatory and geopolitical risks.

Conclusion: Defense as a Growth Engine—But Can It Sustain?

nLIGHT’s Q1 results are a clear win for investors betting on its defense pivot. The 50.4% A&D revenue growth and 26.7% gross margin expansion validate its strategic focus, while revised analyst estimates reflect renewed confidence. The stock’s post-earnings surge and $10 price target suggest investors are pricing in a turnaround.

However, the path to profitability remains fraught. The commercial segment’s decline and sector-level headwinds—such as semiconductor industry stagnation—cannot be ignored. For nLIGHT to outperform, it must execute flawlessly on defense contracts and stabilize its commercial business. If it succeeds, the 25%+ annual growth target for A&D could make LASR a standout play in a defensive tech landscape.

The verdict? nLIGHT is worth watching, but investors must weigh its defense-driven upside against lingering sector risks. The next earnings report will be critical—particularly if Q2 revenue hits the $56 million midpoint—to confirm this nascent turnaround is no flash in the pan.