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On Thursday, Rosenblatt Securities confirmed its Buy rating on Coherent (NYSE:COHR) with a steady price target of $95.00. The firm’s analysts expressed confidence in the company’s leadership and strategic direction following Coherent’s Analyst & Investor Day. Coherent, recognized as a leading provider of photonics technology, is witnessing increased application of its products in high-growth areas such as Data Center & Communications and Industrial sectors.
The company’s CEO, Jim Anderson, emphasized Coherent’s unique position in the market and his commitment to a strategy of under-promising and over-delivering. Despite a slight underperformance in the stock on Wednesday, analysts attributed this to the stock’s strong performance in the weeks leading up to the event rather than any fundamental shortcomings. The absence of specific details on new business exits or divestitures appeared to be the main point of contention for investors. InvestingPro analysis shows the company maintains a healthy financial position with a current ratio of 2.47, indicating strong liquidity to meet short-term obligations.
During the previous fiscal year, Coherent successfully exited five unprofitable product lines and closed nine facilities, with more actions planned. The company’s management style, which prioritizes execution before discussing specifics with investors, was highlighted as a positive factor by Rosenblatt Securities.
Analysts also showed support for Coherent’s CFO, Sherri Luther, who is expected to drive revenue growth, expand margins, manage operational expenses efficiently, and focus on reducing debt. With the market growth and target margins presented, Rosenblatt anticipates that Coherent could potentially double its operating profit within four years, leading to an earnings per share (EPS) of $10 to $12 in that timeframe.
In other recent news, Coherent Inc. has received multiple updates from investment firms regarding its financial outlook and market positioning. Notably, BofA Securities has raised its price target for Coherent to $92, maintaining a Buy rating, and highlighted the company’s potential to capture a significant share of the $32 billion data center market by 2030. Jefferies also reiterated a Buy rating with a $110 price target, emphasizing Coherent’s strong positioning in the photonics sector and its projected double-digit growth in revenue and earnings per share (EPS) by 2028/29. Meanwhile, Raymond (NSE:RYMD) James increased its price target to $96, affirming a Strong Buy rating, and noted Coherent’s ambitious long-term financial targets, including gross and operating margin improvements.
Needham has also adjusted its price target for Coherent to $90, maintaining a Buy rating, with expectations of double-digit revenue growth supported by advancements in photonics technology. JPMorgan has kept its Overweight rating with an $86 price target, expressing optimism about Coherent’s growth trajectory in the data center and industrial sectors. Analysts from these firms have pointed to Coherent’s strategic focus on operational efficiencies and potential divestitures as factors that could enhance profitability and market positioning.
Coherent’s management has projected significant growth in its data center and communications business, with a compound annual growth rate of 15-20% over the next few years. Additionally, the company has set ambitious targets for gross margins to exceed 42% and operating margins over 24%, with EPS potentially reaching $8-9 by fiscal year 2028. These developments have reinforced confidence among analysts about Coherent’s future prospects and its ability to capitalize on high-growth opportunities in various sectors.
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