nLIGHT Stock Soars 11.96% on Aerospace and Defense Growth

nLIGHT's stock surged 11.96% in pre-market trading on April 30, 2025, reflecting a significant uptick in investor interest and market sentiment.

Stifel has adjusted its price target for nLIGHT, reducing it from $14 to $12 while maintaining a Buy rating. This adjustment comes after reviewing the initial earnings reports and forecasts from the applied technologies sector, which have generally surpassed expectations, especially among firms involved with hyperscaler and AI investments. The financial firm anticipates that companies tied to infrastructure will largely meet expectations in their reporting and guidance. However, they have adjusted predictions for several companies, including a reduction in PC sales forecasts for AMD and a reassessment of Lattice Semiconductor's aggressive 2026 projections. Additionally, a cautious stance has been taken on IPG Photonics due to concerns regarding the automotive sector and the Chinese market. The decision to lower price targets across the group reflects a broader trend of multiple compression, influenced by increased macroeconomic uncertainty and reduced market visibility.

nLIGHT reported a 9% decrease in total revenue for Q4 2024, dropping to $47.4 million from $51.9 million in Q4 2023. Product revenue also declined by 16% to $31.7 million, while development revenue increased by 12% to $15.7 million. The company's total revenue for the full year 2024 was $198.5 million, a 5% decrease from $209.9 million in 2023. Despite these challenges, the Aerospace and Defense sector showed strong growth, increasing by 20% year over year to $109.5 million. The company's gross margin for Q4 2024 was negatively impacted by non-routine charges, resulting in a 2% margin, which would have been approximately 15% without these charges. The company's non-GAAP operating expenses for Q4 2024 were $17.7 million, and the GAAP net loss was $25 million or $0.51 per share, compared to a net loss of $13.2 million or $0.28 per share in Q4 2023. The company's cash equivalents and investments at the end of 2024 were $100.9 million, and inventory decreased to $40.8 million from $52.1 million at the end of 2023. The funded backlog at the end of 2024 was $167 million, 55% higher than at the end of 2023. For Q1 2025, nLIGHT expects revenue to be in the range of $45 million to $51 million, with a total gross margin of 13% to 17% and adjusted EBITDA in the range of approximately negative $6 million to negative $3 million.

Despite the challenges in the commercial markets, nLIGHT's Aerospace and Defense sector has shown robust growth, becoming the primary driver of total sales. The company's strong pipeline of directed energy programs and laser sensing opportunities is expected to drive at least 25% revenue growth in this sector in 2025. However, the company faces execution challenges and timing issues with the delivery of defense products, impacting revenue recognition. The company's strong alignment with the Department of Defense's critical priorities, such as directed energy and laser sensing, positions it well for future growth.