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Coherent, Inc. (COHR - Free Report) has given investors plenty of reasons to be optimistic. Estimates are climbing and shares are now a Zacks #1 Rank (Strong Buy).

Shares have sold off sharply but if you can stomach the ride it could be a great time buy up shares at a discount.

Company Description

Coherent provides photonics-based solutions for commercial and scientific researcher markets, including lasers, precision optics and related items.

Sales Jump 49%

Coherent announced its first-quarter results for fiscal 2011 on Jan 27, which included a 49% surge in the top line, to $183 million. Bookings were up 48% year over year and up 22% sequentially, to $234 million. Both of these items were record highs for the company.

Additionally, Coherent is reaping the benefits of restructuring efforts which led to record operating profit. Net income for the period more than quadrupled, to $19.1 million. Earnings broke down to $0.76 per share, beating the Zacks Consensus Estimate by 17 cents.

Optimistic Moving Forward

In the same earnings release Coherent said it already had a substantial $32 million order in the second quarter. Their full-year revenue estimate is between $760 and $780 million. Revenue in 2010 was $605, so they are expecting a banner year.

Analysts agree and have been pushing estimates even higher. The Zacks Consensus Estimate for fiscal 2011 is now $2.98, up from $2.44 three months ago. Next year's forecasts average $3.41, up from $2.72. Given the $1.65 earned last year, the expected growth rates are 81% and 14%.

The Chart

Shares of COHR have plunged in the recent sell off, but given these dramatic growth rates, bullish outlooks and technicals saying the stock is oversold this looks like a great entry point.

Coherent  - ticker COHR>


Bill Wilton is the Aggressive Growth Stock Strategist for He is also the Editor in charge of the Zacks Small Cap Trader service

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