Needham has raised its price target on Lantronix, Inc. (NASDAQ: LTRX) to $8.50, up from $7.50, while maintaining a Buy rating on the shares. The stock was trading at $5.82 at the time of the report. Analyst sentiment on the company is strongly positive overall, with a consensus recommendation of Strong Buy and price targets from $7.50 to $10.00.
The analyst action follows Lantronix's fiscal second-quarter 2026 results, which showed revenue and earnings per share broadly in line with consensus. Excluding the impact of a stalled customer, Gridspertise, the company recorded first-quarter revenue growth of 17% year-over-year. Lantronix’s balance sheet remains liquid relative to short-term obligations, with a market capitalization of $229 million and a reported current ratio of 2.75.
Geographic performance was notable in the Americas, where revenue rose 25% year-over-year. Management attributed that increase in part to traction for new System on Module (SoM) products, especially those aimed at drone applications. According to company commentary cited by the analyst, drone adoption is progressing faster than previously anticipated. The newly approved defense budget is expected to support multiple tranches across calendar 2026 amounting to 340,000 units over two years, a factor that informed Needham's revised view.
Management provided guidance for the fiscal third quarter that was characterized as in-line with expectations as drone sales build while a mobile network project winds down. Separately, the company raised its fiscal 2026 revenue target from drones by 30% to approximately $10 million and described the drone vertical as fast-emerging, with expectations for high double-digit percentage growth in fiscal 2027.
Needham's analyst cited "increased confidence" as the motivation for lifting the price target. The firm implemented modest reductions to its fiscal 2026 estimates while increasing projections for fiscal 2027, reflecting greater expected contribution from drones over the longer term.
In the most recent quarter, Lantronix reported earnings per share of $0.04, beating the forecasted $0.03 and representing a 33.33% upside versus expectations. Revenue, however, came in slightly under consensus at $29.8 million compared with an anticipated $29.94 million. These mixed results have affected investor sentiment as the market watches management's ability to align future revenue with forecasts.
No material merger activity or changes to analyst ratings were reported alongside these updates. The focus for investors and market observers remains on execution - particularly continued drone sales growth and the transition away from the mobile network project - as drivers of future revenue alignment.
Sector impacts - The developments touch technology hardware and defense-related markets, with implications for companies serving drone systems and embedded module supply chains. Financial markets tracking small-cap technology hardware names may also react to the evolving revenue trajectory.