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1. Company Snapshot

1.a. Company Description

Coherent, Inc.provides lasers, laser-based technologies, and laser-based system solutions for a range of commercial, industrial, and scientific research applications.It operates in two segments, Original Equipment Manufacturers (OEM) Laser Sources and Industrial Lasers & Systems.


The company designs, manufactures, markets, and services lasers, laser tools, precision optics, and related accessories; and laser measurement and control products.Its products are used for applications in microelectronics, materials processing, OEM components and instrumentation, and scientific research and government programs.The company markets its products through a direct sales force in the United States, as well as through direct sales personnel and independent representatives internationally.


Coherent, Inc.was founded in 1966 and is headquartered in Santa Clara, California.As of July 1, 2022, Coherent, Inc.


operates as a subsidiary of II-VI Incorporated.

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1.b. Last Insights on COHR

Breaking News: Coherent Corp. is set to join the S&P 500 index on March 23. The company, a global leader in photonics, recently announced new single- and dual-chip uncooled 980nm micro-pump lasers. Nvidia has invested $2 billion in Coherent as part of a strategic partnership. Coherent's CEO, Jim Anderson, stated that joining the S&P 500 is a testament to the company's strength and technology portfolio. No recent earnings release was found. Analysts at various firms have not provided a recent recommendation.

1.c. Company Highlights

2. Coherent's Q2 FY2026 Earnings: A Strong Performance Driven by Data Center and Telecom Demand

Coherent reported a record revenue of $1.69 billion in Q2 FY2026, up 7% sequentially and 17% year over year, with a non-GAAP gross margin of 39%, a 24 basis point improvement compared to the prior quarter. The company's EPS came in at $1.29, beating estimates of $1.22. The strong financial performance was driven by the data center and communications segment, which now accounts for over 70% of the company's revenue.

Publication Date: Feb -09

📋 Highlights
  • Data Center Revenue Growth:: Data center revenue grew 14% sequentially and 36% YoY in Q2, with double-digit sequential growth expected in March and June 2026.
  • Production Capacity Expansion:: Six-inch indium phosphide wafer starts reached 80% of annual targets, enabling margin expansion and supporting 1.6 terabit transceiver demand.
  • Financial Performance:: Q2 revenue hit $1.69 billion (up 7% sequentially, 17% YoY), with 39% non-GAAP gross margin (up 77 bps YoY) and Q3 guidance of $1.7–$1.84 billion.
  • Transceiver Demand:: 1.6 terabit transceivers saw 4x bookings-to-bill ratio in Q2, with higher ASPs driving margin accretion and expected scale-up deployments in CPO.
  • Strategic Partnerships & R&D:: Secured a multi-year Apple agreement for 3D sensing, contributing to H2 2026 revenue, alongside 16% YoY R&D investment growth for long-term innovation.

Segment Performance

The data center business saw a substantial acceleration in sequential growth, with Q2 revenue growing 14% sequentially and 36% year over year. The company's traditional telecom business also saw strong demand, driven by ongoing market recovery and new product introductions. The demand for Coherent's products is described as "extraordinary" with bookings going further out in time than previously seen, with bookings exceeding 4x the bill in the last quarter.

Operational Highlights

Coherent is investing in the rapid expansion of its production capacity, including its six-inch indium phosphide production line in Texas and Sweden, which is expected to support significant revenue growth and margin expansion. The company is also expanding its capacity for transceiver assembly and test, with new facilities in Malaysia and Vietnam. The six-inch indium phosphide ramp is driving benefits, with a rough estimate of half the cost of three-inch production, which will build over the coming quarters.

Valuation and Growth Prospects

With a P/E Ratio of 120.65 and an expected revenue growth rate of 14.9% next year, the company's valuation appears to be pricing in significant growth expectations. The EV/EBITDA ratio of 30.96 also suggests that the company's valuation is dependent on its ability to deliver strong profitability. The company's focus on expanding its production capacity and investing in R&D to drive long-term growth is expected to support its growth prospects.

Margin Expansion

The company's non-GAAP gross margin is expected to remain strong, with benefits from cost reductions, yield improvements, pricing optimization, volume, and mix driving margin improvement. The ramp of 1.6 terabit transceivers is also expected to be margin accretive, with higher ASPs driving gross margin expansion.

3. NewsRoom

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Optical-Tech Stocks Looking Sharp: Ciena Up 9%, Lumentum Rises 8%, Coherent Climbs 7%

Mar -10

Source: 247wallst.com

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De-Clogging the Future: Why Photonics is AI's Ultimate Growth Engine

Mar -10

Source: zacks.com

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Coherent's Rally Is Really About Optical Supply

Mar -10

Source: seekingalpha.com

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Nvidia Is Investing Billions in These Two Artificial Intelligence (AI) Players. Now They're Joining the S&P 500

Mar -09

Source: fool.com

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These Two Nvidia-Backed Companies Are Joining the S&P 500 Later This Month

Mar -09

Source: investopedia.com

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Is COHERENT CORP (COHR) Stock Outpacing Its Business Services Peers This Year?

Mar -09

Source: zacks.com

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Coherent to Join the S&P 500

Mar -09

Source:

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Stock Market Today: Futures Plunge as Oil Tops $100/Barrel; Treasury Yields Jump on Stagflation Fears; Dollar Strengthens

Mar -09

Source: investopedia.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (9.61%)

6. Segments

Networking

Expected Growth: 10.43%

Coherent's Networking segment growth is driven by increasing demand for high-speed optical interconnects, fueled by cloud computing, artificial intelligence, and 5G infrastructure investments. Additionally, the company's leadership in indium phosphide and silicon photonics technologies enables it to capitalize on the growing need for high-bandwidth, low-latency networking solutions.

Lasers

Expected Growth: 9.33%

Coherent, Inc.'s laser segment growth is driven by increasing demand for precision manufacturing, semiconductor fabrication, and microelectronics. The company's leadership in ultrafast laser technology and its expanding presence in the automotive and aerospace industries also contribute to its growth. Additionally, the rising adoption of laser-based solutions in medical and industrial applications fuels the segment's 9.33% growth.

Materials

Expected Growth: 8.5%

Coherent, Inc.'s 8.5% growth in Materials segment is driven by increasing demand for laser-based solutions in microelectronics, robust growth in OLED display manufacturing, and rising adoption of laser technology in automotive and industrial applications.

7. Detailed Products

Laser Systems

Coherent offers a wide range of laser systems, including ultrafast lasers, diode lasers, and excimer lasers, used in various applications such as material processing, spectroscopy, and microscopy.

Optical Communications

Coherent provides optical communications products, including optical transceivers, optical amplifiers, and optical switches, used in data centers, metro networks, and long-haul networks.

Microelectronics

Coherent offers a range of products for microelectronics, including laser-based solutions for semiconductor manufacturing, flat panel display manufacturing, and LED manufacturing.

Instrumentation

Coherent provides instrumentation products, including spectrometers, interferometers, and microscopes, used in various applications such as biomedical research, material science, and quality control.

OEM Components

Coherent offers a range of OEM components, including laser diodes, laser modules, and optical components, used in various applications such as medical devices, industrial equipment, and aerospace.

Services

Coherent provides a range of services, including laser system integration, custom laser solutions, and technical support, used in various applications such as material processing, spectroscopy, and microscopy.

8. Coherent, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Coherent, Inc. is medium due to the availability of alternative laser technologies.

Bargaining Power Of Customers

The bargaining power of customers is low due to the specialized nature of Coherent, Inc.'s products and the lack of alternative suppliers.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium due to the presence of multiple suppliers for raw materials and components.

Threat Of New Entrants

The threat of new entrants is high due to the growing demand for laser technologies and the potential for new companies to enter the market.

Intensity Of Rivalry

The intensity of rivalry is high due to the competitive nature of the laser technology industry and the presence of established competitors.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 47.37%
Debt Cost 8.76%
Equity Weight 52.63%
Equity Cost 12.40%
WACC 10.68%
Leverage 90.00%

11. Quality Control: Coherent, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Trimble

A-Score: 4.7/10

Value: 1.3

Growth: 5.2

Quality: 6.9

Yield: 0.0

Momentum: 7.0

Volatility: 7.7

1-Year Total Return ->

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Stock-Card
MKS Instruments

A-Score: 4.6/10

Value: 3.4

Growth: 5.0

Quality: 6.9

Yield: 1.0

Momentum: 8.0

Volatility: 3.3

1-Year Total Return ->

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Stock-Card
Itron

A-Score: 4.5/10

Value: 5.4

Growth: 5.8

Quality: 7.1

Yield: 0.0

Momentum: 3.5

Volatility: 5.3

1-Year Total Return ->

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Stock-Card
Cognex

A-Score: 3.7/10

Value: 1.2

Growth: 2.8

Quality: 7.6

Yield: 1.0

Momentum: 5.0

Volatility: 4.3

1-Year Total Return ->

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Stock-Card
Coherent

A-Score: 3.4/10

Value: 0.8

Growth: 4.9

Quality: 4.4

Yield: 0.0

Momentum: 8.5

Volatility: 2.0

1-Year Total Return ->

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Stock-Card
Novanta

A-Score: 3.3/10

Value: 1.2

Growth: 7.0

Quality: 5.5

Yield: 0.0

Momentum: 2.0

Volatility: 4.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

260.64$

Current Price

260.64$

Potential

-0.00%

Expected Cash-Flows