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SYM vs. COHR: Which Technology Services Stock Has an Edge?
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Key Takeaways
Symbotic posted 26% revenue growth in Q325, driven by its $22.4 B backlog.
Coherent's revenues rose 23% in fiscal 2025, fueled by AI datacenter and telecom recovery.
COHR trades at a cheaper valuation than SYM and benefits from a strong product portfolio.
Symbotic (SYM - Free Report) and Coherent Corp. (COHR - Free Report) are well-established names in the Zacks Technology Services industry. Symbotic, based in Wilmington, MA, develops, commercializes, and deploys innovative, comprehensive technology solutions for improving supply chain operations. Through its operations, SYM has emerged as a key player in the AI-enabled robotics technology field for the supply chain.
On the other hand, Coherent empowers market innovators to define the future through breakthrough technologies, from materials to systems. COHR delivers a range of diversified applications for the industrial, communications, electronics and instrumentation markets. COHR also offers research and development, manufacturing, sales, service and distribution facilities.
Given this backdrop, let’s examine closely to find out which technology services player currently holds the edge, and more importantly, which might be the smarter investment now.
The Case for SYM
Symbotic’s high backlog positions it to generate substantial revenues in the foreseeable future. We are optimistic about its margin expansion, driven by increased system deployment.
In the third quarter of fiscal 2025, results of which were released on Aug. 6, the company had $22.4 billion in backlog. Management stated that it expects to recognize nearly 11% of its remaining performance obligations as revenues in the next 12 months, 56% of its remaining performance obligations as revenues in the following 13-60 months, and the rest thereafter.
Revenues increased 26% year over year. We expect the top line to continue to be driven by the conversion of this sizable backlog. For the fourth quarter of fiscal 2025, Symbotic expects revenues in the $590-$610 million range and adjusted EBITDA in the $45-$49 million band.
In the third quarter, SYM delivered a negative earnings surprise. SYM’s earnings surprise history is not impressive. In the trailing four quarters, it surpassed the Zacks Consensus Estimate twice and missed in the other two, with an average negative surprise of 78.3%.
SYM’s partnership with Walmart (WMT - Free Report) has been very profitable, accounting for a significant portion of its revenues. Walmart is the largest customer of SYM. While we do not anticipate any threat soon, since Walmart has invested in Symbotic, investors should be cautious about customer concentration risks. Additionally, Symbotic currently does not pay dividends and has no plans to do so, which weakens its appeal among income-focused investors.
The Case for COHR
This Pennsylvania-based optical and semiconductor manufacturer reported a 23% increase in fiscal 2025 revenues, driven by growth in AI datacenter demand, coupled with the continuing recovery in telecom. COHR is focusing on ramping up new products, which should keep the top line in good shape going forward as well. The initial revenue shipments of the new 1.6T transceivers began in the fourth quarter of fiscal 2024, and solid contributions are expected in fiscal 2026.
Coherent is making good progress regarding the development of 3.2T transceiver products and technologies. The company has boosted indium phosphide capacity and is utilizing the world’s first 6-inch indium phosphide production line.
Communications revenues increased 23% in fiscal 2025. Growth was driven by robust demand for the new 100-gig, 400-gig, and 800-gig ZR/ZR+ coherent transceivers. Management expects these products to boost the company’s top line throughout fiscal 2026 and beyond.
Driven by the strong product portfolio, the company outpaced the Zacks Consensus Estimate for earnings in each of the past four quarters, with the average beat being 13%.
Over the past month, Symbotic shares, though down in excess of 5%, have performed better than the double-digit decline seen in COHR shares. Concerns over Coherent’s market share in its datacom offerings may have led to the sharp decline. In the recently released fourth quarter of fiscal 2025 results, Datacom, within COHR’s Networking segment, increased only 3% sequentially, compared with the 11% increase witnessed in the fiscal third quarter.
1-Month Price Comparison
Image Source: Zacks Investment Research
COHR looks more attractive than SYM from a valuation standpoint. COHR currently trades at a higher forward 12-month price-to-sales (P/S) multiple of 2.1 compared with SYM’s 10.33. SYM has a Value Score of F. Meanwhile, COHR has a Value Score of C.
Image Source: Zacks Investment Research
Conclusion
While we are optimistic about SYM’s margin expansion, driven by increased system deployment, challenges like high valuation, unfavorable earnings surprise history and customer concentration risks raise concerns.
Meanwhile, COHR looks solid on the data center and communication front, with new products expected to boost the top line in the coming months. COHR’s attractive valuation adds to its appeal. New partnerships and the anticipated surge in data transmission are likely to keep COHR in good shape.
Given the above analysis, COHR seems a better pick than SYM now.
While COHR sports a Zacks Rank #1 (Strong Buy), SYM is currently #5 Ranked (Strong Sell).
Image: Bigstock
SYM vs. COHR: Which Technology Services Stock Has an Edge?
Key Takeaways
Symbotic (SYM - Free Report) and Coherent Corp. (COHR - Free Report) are well-established names in the Zacks Technology Services industry. Symbotic, based in Wilmington, MA, develops, commercializes, and deploys innovative, comprehensive technology solutions for improving supply chain operations. Through its operations, SYM has emerged as a key player in the AI-enabled robotics technology field for the supply chain.
On the other hand, Coherent empowers market innovators to define the future through breakthrough technologies, from materials to systems. COHR delivers a range of diversified applications for the industrial, communications, electronics and instrumentation markets. COHR also offers research and development, manufacturing, sales, service and distribution facilities.
Given this backdrop, let’s examine closely to find out which technology services player currently holds the edge, and more importantly, which might be the smarter investment now.
The Case for SYM
Symbotic’s high backlog positions it to generate substantial revenues in the foreseeable future. We are optimistic about its margin expansion, driven by increased system deployment.
In the third quarter of fiscal 2025, results of which were released on Aug. 6, the company had $22.4 billion in backlog. Management stated that it expects to recognize nearly 11% of its remaining performance obligations as revenues in the next 12 months, 56% of its remaining performance obligations as revenues in the following 13-60 months, and the rest thereafter.
Revenues increased 26% year over year. We expect the top line to continue to be driven by the conversion of this sizable backlog. For the fourth quarter of fiscal 2025, Symbotic expects revenues in the $590-$610 million range and adjusted EBITDA in the $45-$49 million band.
In the third quarter, SYM delivered a negative earnings surprise. SYM’s earnings surprise history is not impressive. In the trailing four quarters, it surpassed the Zacks Consensus Estimate twice and missed in the other two, with an average negative surprise of 78.3%.
Symbotic Price and EPS Surprise
Symbotic price-eps-surprise | Symbotic Quote
SYM’s partnership with Walmart (WMT - Free Report) has been very profitable, accounting for a significant portion of its revenues. Walmart is the largest customer of SYM. While we do not anticipate any threat soon, since Walmart has invested in Symbotic, investors should be cautious about customer concentration risks. Additionally, Symbotic currently does not pay dividends and has no plans to do so, which weakens its appeal among income-focused investors.
The Case for COHR
This Pennsylvania-based optical and semiconductor manufacturer reported a 23% increase in fiscal 2025 revenues, driven by growth in AI datacenter demand, coupled with the continuing recovery in telecom. COHR is focusing on ramping up new products, which should keep the top line in good shape going forward as well. The initial revenue shipments of the new 1.6T transceivers began in the fourth quarter of fiscal 2024, and solid contributions are expected in fiscal 2026.
Coherent is making good progress regarding the development of 3.2T transceiver products and technologies. The company has boosted indium phosphide capacity and is utilizing the world’s first 6-inch indium phosphide production line.
Communications revenues increased 23% in fiscal 2025. Growth was driven by robust demand for the new 100-gig, 400-gig, and 800-gig ZR/ZR+ coherent transceivers. Management expects these products to boost the company’s top line throughout fiscal 2026 and beyond.
Driven by the strong product portfolio, the company outpaced the Zacks Consensus Estimate for earnings in each of the past four quarters, with the average beat being 13%.
Coherent Price and EPS Surprise
Coherent price-eps-surprise | Coherent Quote
Price Performance & Valuation of COHR & SYM
Over the past month, Symbotic shares, though down in excess of 5%, have performed better than the double-digit decline seen in COHR shares. Concerns over Coherent’s market share in its datacom offerings may have led to the sharp decline. In the recently released fourth quarter of fiscal 2025 results, Datacom, within COHR’s Networking segment, increased only 3% sequentially, compared with the 11% increase witnessed in the fiscal third quarter.
1-Month Price Comparison
COHR looks more attractive than SYM from a valuation standpoint. COHR currently trades at a higher forward 12-month price-to-sales (P/S) multiple of 2.1 compared with SYM’s 10.33. SYM has a Value Score of F. Meanwhile, COHR has a Value Score of C.
Conclusion
While we are optimistic about SYM’s margin expansion, driven by increased system deployment, challenges like high valuation, unfavorable earnings surprise history and customer concentration risks raise concerns.
Meanwhile, COHR looks solid on the data center and communication front, with new products expected to boost the top line in the coming months. COHR’s attractive valuation adds to its appeal. New partnerships and the anticipated surge in data transmission are likely to keep COHR in good shape.
Given the above analysis, COHR seems a better pick than SYM now.
While COHR sports a Zacks Rank #1 (Strong Buy), SYM is currently #5 Ranked (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank stocks here.