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Can Coherent's 79% Datacenter Mix Sustain Its Growth Momentum?
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Key Takeaways
Coherent gets 79% of revenues from datacenters and communications, where pro forma sales jumped 59%.
Coherent plans to double indium-phosphide output by year-end, then boost it by more than 100% in 2027.
Coherent sees fiscal Q1 2027 revenues of $2.2-$2.4B and adjusted EPS of $1.85-$2.05.
Coherent Corp. (COHR - Free Report) is leaning heavily on one engine: surging demand for optical connectivity inside artificial intelligence datacenters. The market serving datacenters and communications supplied 79% of fiscal fourth-quarter 2026 revenues and expanded 59% year over year on a pro forma basis. Industrial operations, representing the remaining 21%, grew only 1%. That gap shows how AI infrastructure has recast the company’s growth profile.
Capacity investments could extend the upswing. Coherent aims to double internal indium-phosphide production by calendar year-end, followed by an increase exceeding 100% during 2027. Faster transceivers, optical circuit switches, co-packaged optics and thermal solutions broaden the opportunity.
Management consequently projects first-quarter fiscal 2027 revenues of $2.2-$2.4 billion and adjusted earnings of $1.85-$2.05 per share. The quarter provides a strong base: revenues reached $2.05 billion, reported growth was 34%, adjusted gross margin widened 215 basis points to 40.2% and adjusted EPS rose 74% to $1.74. Still, heavy datacenter exposure means slower hyperscaler spending or manufacturing setbacks could materially affect results. For now, this mix makes datacenter execution the key watchpoint.
How Are Lumentum and Fabrinet Positioned?
Lumentum Holdings (LITE - Free Report) is benefiting from the same optical transition, with fiscal fourth-quarter revenues soaring 109% to $1.01 billion. Lumentum forecasts $1.225-$1.275 billion next quarter as AI demand accelerates, though Lumentum must scale supply smoothly.
Fabrinet (FN - Free Report) , a manufacturer of complex optical products, delivered 45% quarterly revenue growth to a record $1.32 billion. Fabrinet anticipates another sequential increase, but customer concentration and elevated inventories deserve attention. Even so, Fabrinet remains well placed to benefit from expanding optical deployments.
COHR’s Price Performance & Estimates
The stock has gained 207.5% over the past year against the industry’s 13% decline.
Image Source: Zacks Investment Research
From a valuation standpoint, COHR trades at a forward price-to-earnings ratio of 26.87X, above the industry’s 20.2X. 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
Can Coherent's 79% Datacenter Mix Sustain Its Growth Momentum?
Key Takeaways
Coherent Corp. (COHR - Free Report) is leaning heavily on one engine: surging demand for optical connectivity inside artificial intelligence datacenters. The market serving datacenters and communications supplied 79% of fiscal fourth-quarter 2026 revenues and expanded 59% year over year on a pro forma basis. Industrial operations, representing the remaining 21%, grew only 1%. That gap shows how AI infrastructure has recast the company’s growth profile.
Capacity investments could extend the upswing. Coherent aims to double internal indium-phosphide production by calendar year-end, followed by an increase exceeding 100% during 2027. Faster transceivers, optical circuit switches, co-packaged optics and thermal solutions broaden the opportunity.
Management consequently projects first-quarter fiscal 2027 revenues of $2.2-$2.4 billion and adjusted earnings of $1.85-$2.05 per share. The quarter provides a strong base: revenues reached $2.05 billion, reported growth was 34%, adjusted gross margin widened 215 basis points to 40.2% and adjusted EPS rose 74% to $1.74. Still, heavy datacenter exposure means slower hyperscaler spending or manufacturing setbacks could materially affect results. For now, this mix makes datacenter execution the key watchpoint.
How Are Lumentum and Fabrinet Positioned?
Lumentum Holdings (LITE - Free Report) is benefiting from the same optical transition, with fiscal fourth-quarter revenues soaring 109% to $1.01 billion. Lumentum forecasts $1.225-$1.275 billion next quarter as AI demand accelerates, though Lumentum must scale supply smoothly.
Fabrinet (FN - Free Report) , a manufacturer of complex optical products, delivered 45% quarterly revenue growth to a record $1.32 billion. Fabrinet anticipates another sequential increase, but customer concentration and elevated inventories deserve attention. Even so, Fabrinet remains well placed to benefit from expanding optical deployments.
COHR’s Price Performance & Estimates
The stock has gained 207.5% over the past year against the industry’s 13% decline.
From a valuation standpoint, COHR trades at a forward price-to-earnings ratio of 26.87X, above the industry’s 20.2X. 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.