These Stocks Poised To Benefit From 3D-Sensing Smartphones – Investor's Business Daily

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Apple‘s (AAPL) iPhone 8 is expected to kick off a wave of smartphones with augmented-reality capabilities, boosting suppliers that make depth-sensing cameras and components.

Rosenblatt Securities analyst Jun Zhang on Monday identified several component suppliers likely to benefit from the trend. They include Lumentum (LITE) and Viavi Solutions (VIAV), both of which he rates as buy.

“Many tier-1 Chinese (smartphone makers) might adopt 3D sensing within a year after Apple launches (the iPhone 8) using 3D sensing,” Zhang said in a note to clients. “In our view, 3D sensing might evolve into two groups: 1) a front camera for facial recognition, and 2) a rear camera for 3D scanning. We believe online shopping, facial recognition, and gaming will likely be three key 3D-sensing applications.”

Lumentum’s optical scanning product is likely to be popular with Apple rivals, he said.

Viavi Solutions should maintain its leading position in optical filters over the next two years, Zhang said.

“We are positive on Viavi as we believe the business is not heavily exposed to the volatility of the optical market and remains a 3D-sensing market leader, which we believe has not been fully reflected in the stock price,” Zhang said.

Apple has booked capacity of 150 million optical filter units from Viavi in 2018, he said. Plus, many Chinese smartphone makers have picked Viavi as their sole optical filter supplier, he said.


IBD’S TAKE: Lumentum Holdings is currently ranked No. 1 on the IBD 50 list of top-performing growth stocks.


Optical component supplier Finisar (FNSR) also is believed to have a share of the business for laser modules for the depth sensor in the iPhone 8, Zhang said.

Chipmakers hoping to capitalize on the 3D-sensing smartphone trend include STMicroelectronics (STM), Qualcomm (QCOM) and Himax Technologies (HIMX), he said.

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