Coherent (NYSE:COHR) gave a weaker-than-expected forecast, facilitating a 21.7% drop in its shares.
For its fourth fiscal quarter, the company's adjusted EPS was reported at 41 cents, a decline from the 98 cents reported in the same period last year, but better than the expected 38 cents.
Revenue for the fourth quarter was $1.21 billion, a notable 36% increase compared to the same period last year, and higher than the $1.15B expected.
"While we believe we are well positioned to benefit from any improvement in the macroeconomic environment, we are not assuming we will see signs of a meaningful rebound in fiscal 2024,” the company said in a shareholder letter.
“We are prepared for a reset year with these external challenges persisting at least through the first half of our fiscal 2024, and potentially into the second half of our fiscal year as our customers continue to take proactive measures to manage inventory and cash."
"Our ongoing engagements and design work suggest to us that we will gain share as the recovery gets underway."
For this quarter, the company anticipates its revenue to be in the range of $1B-$1.1B, worse than the expected $1.17B. The adjusted EPS is seen in the range of $0.05-0.20, while analysts were looking for as much as $0.46.
For FY24, the company projects its revenue to be in the range of $4.5B-$4.7B and adjusted earnings between $1.00 and $1.50. Analysts were looking for $5.1B in FY sales and adjusted EPS of $2.96.
Rosenblatt analysts cut the price target by $10 to $45 per share. The analysts recently cut the rating on COHR stock to Neutral.
“Our rationale was Coherent is a long-term beneficiary of AI networking, but we thought near-term numbers had to go meaningfully lower due to Telecom inventory correction and macro weakness in industrial Lasers. We find the 800G Datacom orders to be promising, and we are also upbeat on COHR's active optical cable opportunity for shorter-distance connections in AI Data Centers, but there are still questions of timing,” they said in a client note.
Needham & Company analysts remain Buy-rated on COHR and highlight that the full-year forecast “excludes several hundred million dollars of AI-related datacom transceiver demand that is being impacted as supply chains work to add capacity to meet demand.”