JPMorgan maintains Coherent stock Overweight with $86 target

On Wednesday, JPMorgan reiterated its Overweight rating on Coherent (NYSE:COHR) shares with a steady price target of $86.00, while InvestingPro data shows analyst targets ranging from $70 to $125. The firm’s analysts highlighted the company’s robust growth trajectory and transformation since CEO Jim Anderson took leadership in June 2024. According to InvestingPro analysis, the stock appears overvalued at current levels, despite showing strong return potential with a 37% gain over the past year. Coherent has reported strong revenue increases, especially in the Communications sector, attributed to Datacom, while also focusing on profitability within its diverse Industrial businesses.

Coherent is expected to continue this momentum, with JPMorgan forecasting a long-term revenue compound annual growth rate (CAGR) exceeding 10% from FY25 to FY28, including divestitures ranging from high-single to low-double digits. This aligns with the company’s impressive recent performance, as InvestingPro data reveals a 21.7% revenue growth in the last twelve months, with total revenue reaching $5.6 billion. The growth is anticipated to be driven by a mid- to high-teens expansion in Communications, led by Datacom and supported by Telecom (BCBA:TECO2m), and a steady performance in Industrial aligned businesses.

The company’s gross margin targets are also a focal point for investors. JPMorgan anticipates that Coherent’s management will aim for a long-term gross margin over 43%, which will be achieved through strategic initiatives such as price increases, cost reductions, and the divestiture or shutdown of low-profit operations. Current gross margins stand at 34.5%, according to InvestingPro data, while the company maintains a healthy current ratio of 2.47, indicating strong liquidity position. This target is expected to be supported by disciplined operating expense management, contributing to a long-term operating margin goal of over 23%.

JPMorgan also noted the potential for Coherent’s earnings per share to reach $7+, surpassing previous expectations. This earnings power, valued at around 20 times earnings—a slight premium to the historical average but below the recent trading average—supports a bull case valuation exceeding $140 in the long term. For deeper insights into Coherent’s valuation metrics and growth potential, InvestingPro subscribers can access comprehensive analysis including 10+ additional ProTips and detailed financial metrics in the Pro Research Report, helping investors make more informed decisions. With these projections, Coherent’s stock has been added to JPMorgan’s Positive Catalyst Watch ahead of the company’s Analyst & Investor Day on May 28th, reflecting the significant upside seen by investors since Anderson’s appointment.

In other recent news, Coherent Inc. reported strong financial results for Q3 2025, with earnings per share (EPS) of $0.91, surpassing the forecasted $0.855. The company’s revenue reached a record $1.5 billion, marking a 24% increase year-over-year. Coherent also reduced its debt by $136 million, enhancing its financial stability. Stifel analysts maintained a Buy rating on Coherent stock with a price target of $100, citing effective execution on growth opportunities. Similarly, Citi analysts upheld a Buy rating with a price target of $110, following Coherent’s earnings that exceeded expectations. Coherent’s Datacom revenue saw an 11% quarter-over-quarter increase, attributed to market share gains. The company anticipates Q4 revenue between $1,425 million and $1,575 million, with a focus on maintaining margins through strategic initiatives. Despite macroeconomic challenges, Coherent’s diversified portfolio and innovative product development continue to drive its performance.

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