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Will Datacenter Momentum Keep Powering Coherent's Growth?
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Key Takeaways
Coherent's fiscal Q4 revenues rose 34% to $2.05B, led by 59% growth in Datacenter & Communications.
Datacenter & Communications supplied nearly 79% of revenue, while adjusted operating margin rose to 21.8%.
COHR sees fiscal Q1 2027 revenues of $2.2-$2.4B, while Industrial sales fell 16% year over year.
Coherent Corp.’s (COHR - Free Report) quarterly revenues climbed to $2.05 billion in the fourth quarter of fiscal 2026, up 34% year over year and 13% sequentially. The standout was Datacenter & Communications, where sales reached $1.62 billion, increasing 59% from the prior-year quarter and 19% from the fiscal third quarter. The business supplied nearly 79% of total revenues, underscoring how rapidly AI infrastructure demand is reshaping Coherent’s portfolio.
That momentum is also lifting profitability. GAAP gross margin expanded 277 basis points year over year to 38.5%, while adjusted operating margin improved 381 basis points to 21.8%. Management expects first-quarter fiscal 2027 revenues of $2.2-$2.4 billion and adjusted earnings of $1.85-$2.05 per share. The outlook suggests optical-connectivity demand and capacity additions can extend the growth run. However, Industrial revenues fell 16% year over year to $431 million, leaving results increasingly dependent on datacenter spending, production ramps and customer execution.
Two Optical Peers to Watch
Among optical peers, Lumentum Holdings (LITE - Free Report) and Applied Optoelectronics (AAOI - Free Report) provide useful benchmarks. Lumentum Holdings generated fiscal fourth-quarter revenues of $1.01 billion, more than doubling year over year, and guided to further sequential growth. Applied Optoelectronics posted second-quarter revenues of $191.9 million, up 86%, as its 800G ramp strengthened.
Lumentum Holdings offers broader scale and stronger margins, whereas Applied Optoelectronics brings faster expansion from a smaller base. Coherent’s greater revenue scale is an advantage, but the progress of both rivals shows that competition for AI-optics demand remains intense. Sustaining leadership will require converting demand into consistent margins and cash.
COHR’s Price Performance & Estimates
The stock has gained 226.5% over the past year against the industry’s 9% fall.
Image Source: Zacks Investment Research
From a valuation standpoint, COHR trades at a forward price-to-earnings ratio of 31.55X, well above the industry’s 21.17X. It carries a Value Score of D.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for COHR’s fiscal 2027 earnings increased over the past 60 days.
View the Zacks #1 Rank List
Image: Bigstock
Will Datacenter Momentum Keep Powering Coherent's Growth?
Key Takeaways
Coherent Corp.’s (COHR - Free Report) quarterly revenues climbed to $2.05 billion in the fourth quarter of fiscal 2026, up 34% year over year and 13% sequentially. The standout was Datacenter & Communications, where sales reached $1.62 billion, increasing 59% from the prior-year quarter and 19% from the fiscal third quarter. The business supplied nearly 79% of total revenues, underscoring how rapidly AI infrastructure demand is reshaping Coherent’s portfolio.
That momentum is also lifting profitability. GAAP gross margin expanded 277 basis points year over year to 38.5%, while adjusted operating margin improved 381 basis points to 21.8%. Management expects first-quarter fiscal 2027 revenues of $2.2-$2.4 billion and adjusted earnings of $1.85-$2.05 per share. The outlook suggests optical-connectivity demand and capacity additions can extend the growth run. However, Industrial revenues fell 16% year over year to $431 million, leaving results increasingly dependent on datacenter spending, production ramps and customer execution.
Two Optical Peers to Watch
Among optical peers, Lumentum Holdings (LITE - Free Report) and Applied Optoelectronics (AAOI - Free Report) provide useful benchmarks. Lumentum Holdings generated fiscal fourth-quarter revenues of $1.01 billion, more than doubling year over year, and guided to further sequential growth. Applied Optoelectronics posted second-quarter revenues of $191.9 million, up 86%, as its 800G ramp strengthened.
Lumentum Holdings offers broader scale and stronger margins, whereas Applied Optoelectronics brings faster expansion from a smaller base. Coherent’s greater revenue scale is an advantage, but the progress of both rivals shows that competition for AI-optics demand remains intense. Sustaining leadership will require converting demand into consistent margins and cash.
COHR’s Price Performance & Estimates
The stock has gained 226.5% over the past year against the industry’s 9% fall.
From a valuation standpoint, COHR trades at a forward price-to-earnings ratio of 31.55X, well above the industry’s 21.17X. It carries a Value Score of D.
The Zacks Consensus Estimate for COHR’s fiscal 2027 earnings increased 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.