Coherent: Datacom Tailwinds, Optical Breakout

Moretus Research
676 Followers

Summary

  • Initiate Strong Buy on COHR with $131 PT, driven by AI datacom demand, manufacturing scale, and next-gen optical modules ramping ahead of consensus.
  • COHR’s vertical integration and new 6-inch indium phosphide line unlock margin expansion, cost advantages, and accelerated revenue growth in datacenter optics.
  • Consensus underestimates COHR’s growth; we model 12% FY26E revenue growth and 490bps GM expansion, justifying a premium 3.6x EV/Sales multiple.
  • Key risks: U.S.-China trade and hyperscaler capex timing, but structural optical tailwinds and operating leverage create asymmetric upside for patient investors.

Metal, laser-cutting tool.

Fertnig

Datacom Tailwinds, Optical Breakout

We initiate coverage on Coherent Corp. (NYSE:COHR) with a Strong Buy rating and $131 price target. As a key designer and manufacturer of advanced lasers and photonic solutions for industrial, datacom, and scientific end markets worldwide, COHR is

This article was written by

Moretus Research
676 Followers
Moretus Research delivers state-of-the-art, buy-side quality equity research for serious investors seeking clarity, conviction, and alpha. We focus on going beyond the obvious. We practice positive paranoia when analyzing investments — understanding sentiment, knowing where our competition is right or wrong, and how that will shape the future of any given security we’re researching. We won’t always be right, but we’re right more often than we’re wrong. More importantly, when we are right, we’re right big. At the beginning of 2023, Oskar Goyvaerts, our CIO, recommended and bought Carvana at $5 per share for our readers — pointing out that the 88% short interest was wildly overblown and that alternative data signaled a looming turnaround. That idea returned more than 60x over three years. Finding another Carvana is unlikely, but we’re confident in our ability to cut through the noise, focus on fundamentals, and uncover a data edge through carefully curated alternative data sources. We cover everything from businesses we own to companies we follow closely because we may want to own them in the future.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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