nLIGHT Soars 58% in 3 Months: Is the Stock Still Worth Buying?

nLIGHT (LASR) shares surged 58.2% over three months, propelled by a stronger-than-expected Q2 2025 performance. The company reported revenues of $61.7 million and non-GAAP EPS of $0.06, with significant growth driven by its Aerospace & Defense (A&D) segment, which saw revenues jump 49% year-over-year to $40.7 million and now comprises 66% of total sales. This defense-heavy mix also boosted product gross margins to 38.5%, leading management to raise its full-year A&D growth outlook to at least 40%, while the stock continues to trade at a discounted valuation compared to its industry and peers.

Analysis

nLIGHT, Inc. (LASR) has demonstrated a significant strategic pivot towards its Aerospace and Defense (A&D) segment, which drove a substantial Q2 2025 earnings beat and a 58.2% stock price surge over three months. The company's Q2 revenue grew 22% year-over-year to $61.7 million, while non-GAAP EPS flipped to a profit of 6 cents from a 10-cent loss a year ago. The A&D division was the primary growth engine, with revenues hitting a record $40.7 million, a 49% YoY increase, now accounting for 66% of total sales. This defense-heavy mix directly fueled a product gross margin expansion to 38.5% from 30.3% in the prior year. Bolstered by progress on key Department of Defense programs like HELSI-2 and DE M-SHORAD, management raised its full-year A&D growth forecast from 25% to at least 40%. Despite this strong performance and positive outlook, management has guided for Q3 gross margins to normalize to a 32-36% range. Furthermore, the stock trades at a forward price-to-sales multiple of 5.97x, a notable discount to the industry average of 9.01x and key peers, suggesting a potential valuation gap if its operational momentum is sustained.

Key Decisions for Investors

• Given the strong A&D revenue growth, raised full-year guidance, and a discounted valuation relative to peers, investors may view the stock as a compelling opportunity despite its recent rally.
• Monitor execution on key defense contracts like HELSI-2 and DE M-SHORAD, as the company's ability to meet its aggressive 40% A&D growth target is critical to the investment thesis.
• Pay close attention to gross margins in the upcoming quarter, as management has guided for a normalization, and sustained profitability will be key for a potential valuation re-rating.
• Consider the structural shift in revenue mix, as the increasing reliance on long-cycle, government-funded defense programs provides greater revenue visibility and durability compared to the more cautious outlook for the industrial segment.