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COHR Soars 57% in 6 Months: Should You Buy, Hold or Sell the Stock?
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Key Takeaways
Coherent posted $5.8B in fiscal 2025 revenues, up 23% y/y, driven by AI and datacom demand.
New 1.6T and 3.2T transceivers plus CPO and OCS products boost Coherent's growth.
Stock trades below industry valuations with stronger returns, liquidity and outlook.
Coherent Corp.'s (COHR - Free Report) stock price has soared 57.1% in the past six months, outperforming the industry's 43.1% rise and the Zacks S&P 500 Composite’s 16.6% growth.
6 Months' Price Performance
Image Source: Zacks Investment Research
This sharp increase in COHR’s share price seems appealing, prompting investors to ride the rally. Whether or not they should get invested appears to be the vital question that needs an answer. Let us delve deeper to arrive at a conclusion.
Transceivers, CPO & OCS: New Actors in COHR’s Growth Story
Coherent registered a 51% rally in its top line in fiscal 2025, with its data center business surging 61% for the year. To keep up this momentum, we expect the company to ramp up new products. In the fourth quarter of fiscal 2024, COHR witnessed the initial revenue shipments of 1.6T transceivers, and it is expected to make exponential contributions in fiscal 2026.
The company has raised its product game already by developing 3.2T transceivers and making efforts on co-packaged optics (CPO)-related technologies. The CPO market is expected to see a CAGR of 30.7% from 2025 to 2034, driven by surging demand for ultra-high bandwidth and low-latency data transfer with hyperscale data centers created by the AI boom.
To capture this demand, the company augmented indium phosphide capacity by 3 times year over year. Also, the company has implemented the world’s first 6-inch indium phosphide production line, which is expected to provide cost relief and volume boost.
Transceivers are not the only be-all and end-all product that COHR is inclined to. The company had already dipped its hand in the optical circuit switch (OCS) business, piling on initial revenues from the fourth quarter of fiscal 2025.
Considering that the global OCS market is anticipated to witness a CAGR of 11.6% from 2025 to 2030, we expect Coherent to gain momentum on this front with the rising demand for high bandwidth and data transmission.
Coherent’s stock is currently priced at 20.35 times forward 12-month earnings per share, lower than the industry’s average of 27.06 times. In terms of the trailing 12-month EV-to-EBITDA ratio, COHR is trading at 12.97 times, significantly below the industry average of 36.36 times. The stock looks cheaper on both counts, raising investor interest.
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
COHR’s return on equity (ROE) and return on invested capital (ROIC) stand at 12.2% and 6.1%, respectively. Both metrics surpassed the industry average of 6.7% for ROE and 3.6% for ROIC. Hence, in terms of profitability, Coherent stands out as the stock that generates higher returns for investors than the industry.
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
When it comes to liquidity, COHR’s position exceeds the current industry average by 1.2 times. Currently, the company holds a current ratio of 2.19, surpassing the industry average of 1.78. With a current ratio of more than 1, we expect the company to cover its short-term obligations easily.
Image Source: Zacks Investment Research
Coherent’s Strong Top & Bottom-Line Outlook
Coherent’s consensus estimate for fiscal 2026 revenues is $6.3 billion, indicating 9% year-over-year growth. For fiscal 2027, 12.8% is the anticipated growth rate. The Zacks Consensus Estimate for fiscal 2027 EPS is set at $4.56, indicating a 29.2% year-over-year increase. The same is expected to rise 32.5% in fiscal 2027.
COHR Faces Fierce Competition in SiC Sector
The competition within the Silicon Carbide (SiC) sector is increasing exponentially, with companies like Wolfspeed (WOLF - Free Report) and ON Semiconductor (ON - Free Report) feeding on a large chunk of the market pie.
Per Future Market Insights, Wolfspeed holds 12% of the market share and pioneers the transition from 150-200mm SiC wafers. On the product type front, metal-oxide-semiconductor field-effect transistors (MOSFETs) hold 33% of the market share. ON Semiconductor EliteSiC MOSFETs are taking the market by storm, with these high-performance devices ideal for powering electronics in electric vehicles.
Despite being a key player in the SiC sector, Coherent witnessed declining SiC end-market demand, resulting in a 6% year-over-year decrease in its Material segment revenues in fiscal 2025. Hence, to gain a competitive advantage over Wolfspeed and ON Semiconductor, COHR will have to ramp up its investments, which may create growth-profitability imbalances.
Coherent’s Nil Dividend Strategy: A Red Flag for Investors
COHR never paid out dividends and does not seem to have any such plan. The only way to achieve a return on investment is stock price appreciation, which is not certain, evidenced by the 13.1% dip in the past month. Hence, it is not a suitable stock for investors seeking regular income in the form of dividends.
Hold Coherent Now
Coherent’s new transceivers, indium phosphide production hike, and optical business switch are fueling its data center business, thus moving its top line exponentially. The company’s financials and top and bottom-line outlooks look promising. Fierce competition and reluctance to pay dividends discourage investors.
Looking at the stock’s recent performance, we can conclude that Coherent has been riding through a correction phase. Hence, we advise investors to adopt a cautious approach and refrain from adding the COHR stock to their portfolio now. Potential buyers are recommended to hold off on investing and watch for further share price adjustments before buying.
Image: Bigstock
COHR Soars 57% in 6 Months: Should You Buy, Hold or Sell the Stock?
Key Takeaways
Coherent Corp.'s (COHR - Free Report) stock price has soared 57.1% in the past six months, outperforming the industry's 43.1% rise and the Zacks S&P 500 Composite’s 16.6% growth.
6 Months' Price Performance
This sharp increase in COHR’s share price seems appealing, prompting investors to ride the rally. Whether or not they should get invested appears to be the vital question that needs an answer. Let us delve deeper to arrive at a conclusion.
Transceivers, CPO & OCS: New Actors in COHR’s Growth Story
Coherent registered a 51% rally in its top line in fiscal 2025, with its data center business surging 61% for the year. To keep up this momentum, we expect the company to ramp up new products. In the fourth quarter of fiscal 2024, COHR witnessed the initial revenue shipments of 1.6T transceivers, and it is expected to make exponential contributions in fiscal 2026.
The company has raised its product game already by developing 3.2T transceivers and making efforts on co-packaged optics (CPO)-related technologies. The CPO market is expected to see a CAGR of 30.7% from 2025 to 2034, driven by surging demand for ultra-high bandwidth and low-latency data transfer with hyperscale data centers created by the AI boom.
To capture this demand, the company augmented indium phosphide capacity by 3 times year over year. Also, the company has implemented the world’s first 6-inch indium phosphide production line, which is expected to provide cost relief and volume boost.
Transceivers are not the only be-all and end-all product that COHR is inclined to. The company had already dipped its hand in the optical circuit switch (OCS) business, piling on initial revenues from the fourth quarter of fiscal 2025.
Considering that the global OCS market is anticipated to witness a CAGR of 11.6% from 2025 to 2030, we expect Coherent to gain momentum on this front with the rising demand for high bandwidth and data transmission.
COHR’s Stock Looks Cheap, Profitability & Liquidity Robust
Coherent’s stock is currently priced at 20.35 times forward 12-month earnings per share, lower than the industry’s average of 27.06 times. In terms of the trailing 12-month EV-to-EBITDA ratio, COHR is trading at 12.97 times, significantly below the industry average of 36.36 times. The stock looks cheaper on both counts, raising investor interest.
COHR’s return on equity (ROE) and return on invested capital (ROIC) stand at 12.2% and 6.1%, respectively. Both metrics surpassed the industry average of 6.7% for ROE and 3.6% for ROIC. Hence, in terms of profitability, Coherent stands out as the stock that generates higher returns for investors than the industry.
When it comes to liquidity, COHR’s position exceeds the current industry average by 1.2 times. Currently, the company holds a current ratio of 2.19, surpassing the industry average of 1.78. With a current ratio of more than 1, we expect the company to cover its short-term obligations easily.
Coherent’s Strong Top & Bottom-Line Outlook
Coherent’s consensus estimate for fiscal 2026 revenues is $6.3 billion, indicating 9% year-over-year growth. For fiscal 2027, 12.8% is the anticipated growth rate. The Zacks Consensus Estimate for fiscal 2027 EPS is set at $4.56, indicating a 29.2% year-over-year increase. The same is expected to rise 32.5% in fiscal 2027.
COHR Faces Fierce Competition in SiC Sector
The competition within the Silicon Carbide (SiC) sector is increasing exponentially, with companies like Wolfspeed (WOLF - Free Report) and ON Semiconductor (ON - Free Report) feeding on a large chunk of the market pie.
Per Future Market Insights, Wolfspeed holds 12% of the market share and pioneers the transition from 150-200mm SiC wafers. On the product type front, metal-oxide-semiconductor field-effect transistors (MOSFETs) hold 33% of the market share. ON Semiconductor EliteSiC MOSFETs are taking the market by storm, with these high-performance devices ideal for powering electronics in electric vehicles.
Despite being a key player in the SiC sector, Coherent witnessed declining SiC end-market demand, resulting in a 6% year-over-year decrease in its Material segment revenues in fiscal 2025. Hence, to gain a competitive advantage over Wolfspeed and ON Semiconductor, COHR will have to ramp up its investments, which may create growth-profitability imbalances.
Coherent’s Nil Dividend Strategy: A Red Flag for Investors
COHR never paid out dividends and does not seem to have any such plan. The only way to achieve a return on investment is stock price appreciation, which is not certain, evidenced by the 13.1% dip in the past month. Hence, it is not a suitable stock for investors seeking regular income in the form of dividends.
Hold Coherent Now
Coherent’s new transceivers, indium phosphide production hike, and optical business switch are fueling its data center business, thus moving its top line exponentially. The company’s financials and top and bottom-line outlooks look promising. Fierce competition and reluctance to pay dividends discourage investors.
Looking at the stock’s recent performance, we can conclude that Coherent has been riding through a correction phase. Hence, we advise investors to adopt a cautious approach and refrain from adding the COHR stock to their portfolio now. Potential buyers are recommended to hold off on investing and watch for further share price adjustments before buying.
COHR currently has a Zacks Rank of #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.