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Is Coherent Well-Positioned to Sail Through the EV Wave?
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Key Takeaways
COHR can look forward to investing more in AI and EV with $400 million from divestiture.
Weak automotive and SiC demand resulted in a 6% Y/Y dip in the Materials segment's revenues.
Heightened focus on Lithium-Sulfur batteries and SHARP technology should be COHR's next move.
Coherent Corp. (COHR - Free Report) holds a leading position in Silicon Carbide (SiC) substrates for power electronics, which enhance the energy efficiency of electric and hybrid-electric vehicles. Its laser technology is also utilized in battery manufacturing. The rising demand for EVs has been a key factor in driving the EV battery market, which is expected to see a CAGR of 9.6% from 2024 to 2035. This expanding market can act as a key enabler for COHR to leverage its offerings and capture a larger piece of the market.
Coherent strengthened its position in the EV space in late 2023 by receiving a $1-billion investment from DENSO and Mitsubishi Electric Corporation to scale manufacturing of SiC power electronics on a 200 mm technology platform. The recent announcement to sell the aerospace and defense business to Advent for $400 million provides the company with an opportunity to reduce debt and invest in AI and EV research and development (R&D).
Despite these positives, COHR experienced a setback in the form of a 6% year-over-year decline in its Materials segment’s revenues in 2025. A softer automotive and SiC end market demand led to this decline, indicating that navigating the EV market purposefully will be a long-term strategy for Coherent.
While COHR’s laser welding and SiC have laid a strong foundation for its long-term growth in the EV sector, the market is fiercely competitive. Rivals like Cognex (CGNX - Free Report) and Applied Materials (AMAT - Free Report) , focusing on automated, highly precise manufacturing of modern electronic devices and other advanced products, pose a threat to Coherent’s market share. To stay ahead of the competition, we expect Coherent to invest heavily in R&D and focus on developing next-gen battery technology like Lithium-Sulfur batteries and monetize its SHARP technology for Lithium battery waste.
COHR’s Price Performance, Valuation & Estimates
Over the past year, Coherent stock has gained 18.8%. While it failed to surpass the 75.4% rally of its industry, COHR improved marginally higher than the Zacks S&P 500 Composite’s 18.3% hike. When compared with competitors, COHR has exceeded Cognex’s 14.5% growth and Applied Materials’ 13.6% dip.
1-Year Price Performance
Image Source: Zacks Investment Research
From a valuation perspective, COHR trades at a forward price-to-earnings ratio of 18.2X, lower than the industry’s 26.52X. Applied Materials appears more affordable, with a forward price-to-earnings ratio of 16.6X, while Cognex, with 43.23X, looks expensive.
P/E - F12M
Image Source: Zacks Investment Research
Coherent Corp and Applied Materials has a Value Score of C, while Cognex carries a D.
The Zacks Consensus Estimate for COHR’s earnings for fiscal 2026 and 2027 has increased 4.1% and 11.2%, respectively, over the past 60 days.
Image: Bigstock
Is Coherent Well-Positioned to Sail Through the EV Wave?
Key Takeaways
Coherent Corp. (COHR - Free Report) holds a leading position in Silicon Carbide (SiC) substrates for power electronics, which enhance the energy efficiency of electric and hybrid-electric vehicles. Its laser technology is also utilized in battery manufacturing. The rising demand for EVs has been a key factor in driving the EV battery market, which is expected to see a CAGR of 9.6% from 2024 to 2035. This expanding market can act as a key enabler for COHR to leverage its offerings and capture a larger piece of the market.
Coherent strengthened its position in the EV space in late 2023 by receiving a $1-billion investment from DENSO and Mitsubishi Electric Corporation to scale manufacturing of SiC power electronics on a 200 mm technology platform. The recent announcement to sell the aerospace and defense business to Advent for $400 million provides the company with an opportunity to reduce debt and invest in AI and EV research and development (R&D).
Despite these positives, COHR experienced a setback in the form of a 6% year-over-year decline in its Materials segment’s revenues in 2025. A softer automotive and SiC end market demand led to this decline, indicating that navigating the EV market purposefully will be a long-term strategy for Coherent.
While COHR’s laser welding and SiC have laid a strong foundation for its long-term growth in the EV sector, the market is fiercely competitive. Rivals like Cognex (CGNX - Free Report) and Applied Materials (AMAT - Free Report) , focusing on automated, highly precise manufacturing of modern electronic devices and other advanced products, pose a threat to Coherent’s market share. To stay ahead of the competition, we expect Coherent to invest heavily in R&D and focus on developing next-gen battery technology like Lithium-Sulfur batteries and monetize its SHARP technology for Lithium battery waste.
COHR’s Price Performance, Valuation & Estimates
Over the past year, Coherent stock has gained 18.8%. While it failed to surpass the 75.4% rally of its industry, COHR improved marginally higher than the Zacks S&P 500 Composite’s 18.3% hike. When compared with competitors, COHR has exceeded Cognex’s 14.5% growth and Applied Materials’ 13.6% dip.
1-Year Price Performance
From a valuation perspective, COHR trades at a forward price-to-earnings ratio of 18.2X, lower than the industry’s 26.52X. Applied Materials appears more affordable, with a forward price-to-earnings ratio of 16.6X, while Cognex, with 43.23X, looks expensive.
P/E - F12M
Coherent Corp and Applied Materials has a Value Score of C, while Cognex carries a D.
The Zacks Consensus Estimate for COHR’s earnings for fiscal 2026 and 2027 has increased 4.1% and 11.2%, respectively, over the past 60 days.
COHR currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.