We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is Coherent's Deleveraging Plan Clearing the Runway for Growth?
Read MoreHide Full Article
Key Takeaways
Coherent cut long-term debt after selling aerospace & defense for $400M and other non-core assets.
COHR lowered leverage to 1.7X from 2.3X a year ago, backed by $899M in cash as long-term debt fell to $3.2B.
COHR is scaling InP and 1.6T transceiver output as datacenter demand drives a book-to-bill ratio above 4X.
Coherent Corp. (COHR - Free Report) has reduced its long-term debt, which ballooned to $4.2 billion in 2023 following the merger of II-VI and legacy Coherent. It marks a pivot to a growth-oriented capital allocator from a survival story. The company ensured that its deleveraging campaign altered its risk profile, and it was made possible by the active streamlining of its portfolio.
In late 2025, Coherent announced the sale of its aerospace and defense business for a whopping $400 million. The central objective was to utilize the proceeds to reduce debt. In addition to this divestiture, in the last month, the company sold its product division that manufactures and sells tools for materials processing to Bystronic. These sell-offs provide a major cushion for the company by reducing lower-margin non-core assets while lowering debt.
During the second quarter of fiscal 2026 earnings call, CFO Sherri Luther explicitly cited that the company maintained a debt leverage ratio of 1.7X, down from the year-ago quarter’s 2.3X. Coherent’s shift to a learner balance sheet was supported by a cash chest of $899 million as of the end of December 2025. The company witnessed a consistent decline in long-term debt, which stood at $3.2 billion.
Management looks forward to the expansion in Coherent’s capacity, which demands higher CapEx. Hence, the focus has shifted from just servicing debt to strengthening the balance sheet, which is vital to fund aggressively. The company is scaling its Indium Phosphide (InP) production, aiming to boost 1.6T transceiver production to meet a book-to-bill ratio that surpassed 4X in the datacenter segment.
A strategic divorce from the legacy business and interest expense cut-down unlocks the financial agility to surf on the AI infrastructure wave with ease, positioning the company for long-term growth.
COHR’s Price Performance, Valuation & Estimates
Over the past year, Coherent’s stock has skyrocketed 281.5%, beating the 19.6% rally of its industry. COHR has exceeded Agora’s (API - Free Report) 18.6% dip and ESCO Technologies’ (ESE - Free Report) 69.6% upsurge in the same period.
1-Year Share Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, Coherent trades at a 12-month forward price-to-earnings ratio of 38.41, exceeding the industry’s 29.75. The stock appears expensive compared with Agora and ESCO Technologies’ 27.43 and 32.23, respectively.
P/E F12M
Image Source: Zacks Investment Research
Coherent Corp, Agora and ESCO Technologies have a Value Score of D.
The Zacks Consensus Estimate for COHR’s earnings for fiscal 2026 and 2027 has increased 5.5% and 13.1%, respectively, over the past 60 days.
View the Zacks #1 Rank List
Image: Bigstock
Is Coherent's Deleveraging Plan Clearing the Runway for Growth?
Key Takeaways
Coherent Corp. (COHR - Free Report) has reduced its long-term debt, which ballooned to $4.2 billion in 2023 following the merger of II-VI and legacy Coherent. It marks a pivot to a growth-oriented capital allocator from a survival story. The company ensured that its deleveraging campaign altered its risk profile, and it was made possible by the active streamlining of its portfolio.
In late 2025, Coherent announced the sale of its aerospace and defense business for a whopping $400 million. The central objective was to utilize the proceeds to reduce debt. In addition to this divestiture, in the last month, the company sold its product division that manufactures and sells tools for materials processing to Bystronic. These sell-offs provide a major cushion for the company by reducing lower-margin non-core assets while lowering debt.
During the second quarter of fiscal 2026 earnings call, CFO Sherri Luther explicitly cited that the company maintained a debt leverage ratio of 1.7X, down from the year-ago quarter’s 2.3X. Coherent’s shift to a learner balance sheet was supported by a cash chest of $899 million as of the end of December 2025. The company witnessed a consistent decline in long-term debt, which stood at $3.2 billion.
Management looks forward to the expansion in Coherent’s capacity, which demands higher CapEx. Hence, the focus has shifted from just servicing debt to strengthening the balance sheet, which is vital to fund aggressively. The company is scaling its Indium Phosphide (InP) production, aiming to boost 1.6T transceiver production to meet a book-to-bill ratio that surpassed 4X in the datacenter segment.
A strategic divorce from the legacy business and interest expense cut-down unlocks the financial agility to surf on the AI infrastructure wave with ease, positioning the company for long-term growth.
COHR’s Price Performance, Valuation & Estimates
Over the past year, Coherent’s stock has skyrocketed 281.5%, beating the 19.6% rally of its industry. COHR has exceeded Agora’s (API - Free Report) 18.6% dip and ESCO Technologies’ (ESE - Free Report) 69.6% upsurge in the same period.
1-Year Share Price Performance
From a valuation standpoint, Coherent trades at a 12-month forward price-to-earnings ratio of 38.41, exceeding the industry’s 29.75. The stock appears expensive compared with Agora and ESCO Technologies’ 27.43 and 32.23, respectively.
P/E F12M
Coherent Corp, Agora and ESCO Technologies have a Value Score of D.
The Zacks Consensus Estimate for COHR’s earnings for fiscal 2026 and 2027 has increased 5.5% and 13.1%, 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.