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The Zacks Consensus Estimate for revenues in the to-be-reported quarter is pegged at $1.4 billion, indicating 19.1% growth on a year-over-year basis. The consensus estimate for total earnings is pinned at 86 cents per share, suggesting a 62.3% surge from the year-ago quarter. There has been no change in analyst estimates or revisions lately.
Image Source: Zacks Investment Research
COHR has an impressive earnings surprise history. In the four trailing quarters, it surpassed the Zacks Consensus Estimate, with an average surprise of 20.3%.
Coherent Showcases Lesser Chances of Posting Q3 Earnings Beat
Our proven model does not conclusively predict an earnings beat for COHR this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
We anticipate the top line to have benefited from the telecom segment’s boom. In the second quarter of fiscal 2025, revenues in this segment increased 11% year over year and 16% from the previous quarter. Solid demand for newly launched products, including 100G, 400G and 800ZR/ZR+, coherent transceivers are likely to have fueled the telecom segment’s revenue growth.
Coherent Stock Soars
COHR shares have gained 23.7% in a year compared with the 24.6% rise of its industry and 10% growth of the Zacks S&P 500 composite. The company has performed better than its industry peers, Alithya Group Inc. (ALYAF - Free Report) and AirJoule Technologies Corporation (AIRJ - Free Report) . ALYAF and AIRJ have declined 16.6% and 55.6% in a year, respectively.
One-Year Price Performance
Image Source: Zacks Investment Research
The COHR stock is looking pricier than its industry and Alithya Group, but is cheaper than AirJoule Technologies. Coherent is currently trading at a trailing 12-month price-to-earnings ratio of 2.67X, higher than the industry’s and Alithya Group’s 1.76X and 1.28X, respectively. AirJoule Technologies is trading at 7.83X, higher than Coherent.
COHR’s Investment Considerations
With the rising traffic between data centers due to increasing AI workloads, the telecom industry is expected to boost investments in higher-capacity interconnects, driving investments in optical transport networks.
The rapid increase in data volume due to the surge in AI’s potential makes AI models complex and demands faster and more efficient data transmission. Therefore, it is fair to assume that the demand for COHR’s datacom products, including high-speed optical transceivers, will be boosted due to this growth cycle. With hyperscalers expanding AI training and inference workloads, the shipment of 800G transceivers has increased as well.
Per management, 1.6T transceivers will be the primary top-line contributor in 2025. This assures growth beyond the 800G cycle. Management performed a customer evaluation for 1.6T transceivers and disclosed that Coherent would witness a smooth transition to the next cycle of technology without deteriorating the demand for 800G.
However, expected revenue growth can be dampened by delayed AI infrastructure spending. There can be periods of growth deceleration that may shake investors’ confidence. Furthermore, geopolitical risks, mainly concerning the United States and China, and potential tariffs may disrupt supply chains, thereby impacting Coherent’s costs and ability to meet demand.
Verdict: Hold Coherent for Now
COHR’s long-term growth primarily depends on AI expansion. The top line is subjected to growth on the back of rising demand for Coherent’s transceivers that facilitate faster and more efficient data transmission. Although management is bullish about the demand for its products, it may be misled by delayed AI infrastructure spending and the uncertainty lying within the tariff war.
Coherent, despite being a fundamentally strong stock, possesses a premium valuation. Hence, it is beneficial for investors to hold on to the COHR stock for now. We recommend potential investors wait for a better entry point that can emerge if the stock undergoes some correction.
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Coherent Pre-Q3 Earnings: Buy or Sell the Stock Ahead of Results?
Coherent Corp. (COHR - Free Report) will report third-quarter fiscal 2025 results on May 7, after market close.
The Zacks Consensus Estimate for revenues in the to-be-reported quarter is pegged at $1.4 billion, indicating 19.1% growth on a year-over-year basis. The consensus estimate for total earnings is pinned at 86 cents per share, suggesting a 62.3% surge from the year-ago quarter. There has been no change in analyst estimates or revisions lately.
COHR has an impressive earnings surprise history. In the four trailing quarters, it surpassed the Zacks Consensus Estimate, with an average surprise of 20.3%.
Coherent Corp. Price, Consensus and EPS Surprise
Coherent Corp. price-consensus-eps-surprise-chart | Coherent Corp. Quote
Coherent Showcases Lesser Chances of Posting Q3 Earnings Beat
Our proven model does not conclusively predict an earnings beat for COHR this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Coherent has an Earnings ESP of 0.00% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Telecom Segment to Have Been COHR’s Driver in Q3
We anticipate the top line to have benefited from the telecom segment’s boom. In the second quarter of fiscal 2025, revenues in this segment increased 11% year over year and 16% from the previous quarter. Solid demand for newly launched products, including 100G, 400G and 800ZR/ZR+, coherent transceivers are likely to have fueled the telecom segment’s revenue growth.
Coherent Stock Soars
COHR shares have gained 23.7% in a year compared with the 24.6% rise of its industry and 10% growth of the Zacks S&P 500 composite. The company has performed better than its industry peers, Alithya Group Inc. (ALYAF - Free Report) and AirJoule Technologies Corporation (AIRJ - Free Report) . ALYAF and AIRJ have declined 16.6% and 55.6% in a year, respectively.
One-Year Price Performance
The COHR stock is looking pricier than its industry and Alithya Group, but is cheaper than AirJoule Technologies. Coherent is currently trading at a trailing 12-month price-to-earnings ratio of 2.67X, higher than the industry’s and Alithya Group’s 1.76X and 1.28X, respectively. AirJoule Technologies is trading at 7.83X, higher than Coherent.
COHR’s Investment Considerations
With the rising traffic between data centers due to increasing AI workloads, the telecom industry is expected to boost investments in higher-capacity interconnects, driving investments in optical transport networks.
The rapid increase in data volume due to the surge in AI’s potential makes AI models complex and demands faster and more efficient data transmission. Therefore, it is fair to assume that the demand for COHR’s datacom products, including high-speed optical transceivers, will be boosted due to this growth cycle. With hyperscalers expanding AI training and inference workloads, the shipment of 800G transceivers has increased as well.
Per management, 1.6T transceivers will be the primary top-line contributor in 2025. This assures growth beyond the 800G cycle. Management performed a customer evaluation for 1.6T transceivers and disclosed that Coherent would witness a smooth transition to the next cycle of technology without deteriorating the demand for 800G.
However, expected revenue growth can be dampened by delayed AI infrastructure spending. There can be periods of growth deceleration that may shake investors’ confidence. Furthermore, geopolitical risks, mainly concerning the United States and China, and potential tariffs may disrupt supply chains, thereby impacting Coherent’s costs and ability to meet demand.
Verdict: Hold Coherent for Now
COHR’s long-term growth primarily depends on AI expansion. The top line is subjected to growth on the back of rising demand for Coherent’s transceivers that facilitate faster and more efficient data transmission. Although management is bullish about the demand for its products, it may be misled by delayed AI infrastructure spending and the uncertainty lying within the tariff war.
Coherent, despite being a fundamentally strong stock, possesses a premium valuation. Hence, it is beneficial for investors to hold on to the COHR stock for now. We recommend potential investors wait for a better entry point that can emerge if the stock undergoes some correction.