nLight surges 6% on Baird's bullish $95 price target
Defense laser manufacturer sees 42% upside as aerospace contracts drive growth
nLight Inc shares surged as much as 6% on Wednesday after Baird initiated coverage on the laser manufacturer with an Outperform rating and a $95 price target, representing 42% upside from current levels around $67.
The bullish initiation underscores growing confidence in nLight's strategic pivot toward aerospace and defense applications, particularly as demand surges for directed energy weapons and high-power fiber lasers. The company's stock has rallied dramatically from its 52-week low of $6.20, now trading near its annual high of $68.50 with a market capitalization of $3.77 billion.
Baird's $95 price target stands well above the consensus analyst target of $66.75, according to market data. The Wall Street firm sees significant growth potential in nLight's fiber and semiconductor lasers, which are increasingly being integrated into advanced defense systems including directed energy weapons platforms.
The bullish thesis follows nLight's exceptional 2025 performance, during which the company recorded $261 million in annual revenue, a 32% increase year-over-year. Most notably, aerospace and defense revenue reached $175 million, representing a 60% jump from the prior year and accounting for 67% of total revenue.
"nLight achieved record full-year revenue of $261 million in 2025, with A&D revenue reaching a record $175 million, representing a 60% year-over-year increase," according to earnings call transcripts. The company also improved gross margins to 30% in 2025, up from 17% the previous year, reflecting its strategic focus on higher-margin defense applications.
Key to Baird's optimism is nLight's progress on major defense programs. The company successfully completed work on the U.S. Army's Directed Energy Maneuver-Short Range Air Defense (DE M-SHORAD) program in the fourth quarter of 2025, delivering a 50-kilowatt coherent beam combined high-energy laser for integration into Stryker combat vehicles.
Additionally, nLight continues advancing its $171 million High Energy Laser Scaling Initiative (HELSI-2) program, which aims to develop a one-megawatt high-energy laser with completion anticipated in late 2026. The company also secured a new $50 million contract for an existing missile program involving laser sensing products used in guidance, proximity detection, and countermeasures.
The company's vertically integrated model—from semiconductor chips to complete laser weapon modules—provides a competitive advantage in the defense market. Management has signaled it will exit its industrial cutting and welding businesses to concentrate resources on higher-margin defense and microfabrication projects.
Analyst sentiment remains broadly positive, with 6 Buy ratings and 1 Hold recommendation according to current data. Institutional investors own 83.5% of shares, reflecting strong professional confidence in the company's defense-focused strategy. The stock carries a high beta of 2.34, indicating significant volatility that has worked in investors' favor during the recent rally.
Looking ahead, nLight is expanding manufacturing capabilities at its new Longmont, Colorado facility to meet projected demand in directed energy and laser sensing. The company expects new prototype awards in directed energy across various power levels, positioning it for continued growth in aerospace and defense markets through 2026 and beyond.