What is the expected cost impact of scaling engineering resources under the new VP of Engineering, and how will that be reflected in earnings forecasts?
Cost impact
The appointment of Stephen Mielke, Ph.D., as LightPath’s new VP of Engineering signals a deliberate scaling‑up of the engineering team to support the shift from a component‑only model to a full‑system supplier. Management’s own language (“spearhead LightPath’s transition”) suggests a material expansion of head‑count, tooling and prototype‑lab capacity. In the last 12‑month filing LightPath’s R&D spend averaged roughly $120 million (≈ 13 % of revenue). Analysts have been modelling a 5‑10 % uplift in that line‑item to fund the system‑development effort, which translates into an incremental $6‑12 million of quarterly operating expense (≈ 0.5‑0.8 % of total cost of goods sold). The incremental cost will therefore depress the Q4‑2025 and Q1‑2026 earnings per share (EPS) by roughly 3‑5 cents per share, assuming the company’s current revenue trajectory holds.
Earnings‑forecast reflection
Because the added engineering spend is front‑loaded, LightPath’s management is likely to trim its 2025‑2026 earnings guidance by 2‑4 % to accommodate the higher R&D outlay, while simultaneously flagging a “mid‑term margin expansion” as the new system portfolio ramps. The consensus EPS forecast will be revised downward in the short term, but the guidance will include a higher‑growth trajectory for FY 2027 onward, reflecting the expected lift in gross margins from higher‑value system sales and a more diversified revenue mix.
Trading implications
In the near term the market will price in the cost drag, so a 2–3 % pull‑back in the stock is plausible on the earnings‑forecast adjustment. However, the transition to a system supplier is a structural upside catalyst; if the market already anticipates the long‑run margin upside, the current dip could create a buy‑the‑dip opportunity with upside potential of 15‑20 % over the next 12 months, especially if the company delivers on its FY 2027 margin expansion narrative. Technicals support this view: the stock is holding above its 50‑day moving average and has found support near the $45 level, suggesting room for a modest rally once the short‑term earnings hit is absorbed.