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On Friday, Jefferies analysts initiated coverage on Coherent shares (NYSE:COHR), assigning a Buy rating and setting a price target of $110.00. With a market capitalization of $13.45 billion and annual revenue exceeding $5.3 billion, Coherent maintains a commanding position in the 400G transceiver market, with expectations to maintain dominance as the industry advances to 800G. According to InvestingPro data, the company has shown strong momentum with a 50% return over the past year, despite recent market volatility.
The analysts believe that despite previous setbacks from unsuccessful acquisitions and overspending, Coherent has a solid business foundation. The firm suggests that with the right strategic moves, Coherent could significantly enhance its profitability. This aligns with InvestingPro analysis, which reveals a healthy current ratio of 2.67 and revenue growth of 14.6% in the last twelve months. Jefferies notes that CEO Jim Anderson’s track record supports the expectation that he can effectively leverage the company’s strengths to improve financial performance.
Concerns have been raised regarding the long-term viability of Coherent’s VCSELs technology at 200G/Lane. However, the company has expressed confidence in its capabilities to develop a 200G VCSEL product. Additionally, Coherent is reported to have a substantial and expanding business in EML (Electro-absorption Modulated Lasers) and SiPho (Silicon Photonics), which could complement its existing product lineup.
The analyst’s commentary underscores Coherent’s potential to overcome past challenges through strategic restructuring and a focus on core competencies. With a robust market presence and the opportunity for improved profitability, Coherent is positioned to capitalize on its industry expertise and leadership.
Jefferies’ endorsement, with a Buy rating and a $110 price target, reflects a positive outlook for Coherent’s stock, suggesting that the company’s efforts to streamline operations and focus on profitable segments are expected to bear fruit in the foreseeable future.
In other recent news, Coherent Corp. reported impressive second-quarter earnings, with adjusted earnings per share of $0.95, surpassing analyst estimates of $0.69. The company achieved revenue of $1.44 billion, exceeding the consensus forecast of $1.37 billion and marking a 27% year-over-year increase. This strong performance was driven by demand in AI-related data center applications and growth in the telecom sector. Coherent’s CEO, Jim Anderson, highlighted the record revenue and growth in these areas. The company also projected third-quarter adjusted EPS between $0.75 and $0.95, with a revenue range from $1.39 billion to $1.48 billion, both above analyst expectations.
In response to these results, Needham raised its price target for Coherent shares to $125, maintaining a Buy rating, citing confidence in the company’s financial health and market position. Rosenblatt Securities also increased its price target to $115, although it retained a Neutral rating, noting the strong quarterly performance and potential future growth. Rosenblatt anticipates that Coherent’s growth narrative could gain momentum in fiscal year 2026, with a potential catalyst at the May 2025 Analyst Day. Coherent’s financial progress included a significant reduction in debt by $132 million, and the company saw improvements in gross and operating margins.
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