COHR Stock Gains 14% in 3 Months: Is This a Buying Opportunity?

Coherent Corp.'s COHR stock price has increased 13.9% in the past three months, outperforming the industry's 12% rise and the 9.3% growth of the Zacks S&P 500 Composite.

COHR’s industry peers, Microvast MVST and Vimeo VMEO, have lost 29.7% and 9.6%, respectively, over the past three months.

3-Month Price Performance

In the year-to-date period, COHR dipped 4.5% compared with Microvast’s 28% rise and Vimeo’s 35.6% decline.

Investors may be attracted to Coherent Corp’s share price increase over the past three months, initiating an instant buy. Let us delve deeper and find out whether buying the stock now is the best option.

COHR’s Data Center & Communications Market-Led Growth

This Pennsylvania-based optical and semiconductor manufacturer reported a 51% increase in revenues for fiscal 2025, driven by growth in the data center and communications markets. The data center market alone surged 61% for the year. This remarkable performance prompts us to question whether the company can sustain this momentum in the future.

We believe that ramping up new products is certainly the path taken by COHR toward continued top-line growth. For instance, the initial revenue shipments of the new 1.6T transceivers began in the fourth quarter of fiscal 2024, and solid contributions are expected in fiscal 2026.

Coherent Corp is already developing 3.2T transceivers and taking significant strides on co-packaged optics-related technologies. To meet the rising demand for this technology, the company has boosted indium phosphide capacity by 3X year over year and is utilizing the world’s first 6-inch indium phosphide production line. Leveraging this technology is expected to provide significant cost and volume advantages.

The company has visions beyond transceivers, diversifying its growth engines. In the fourth quarter of fiscal 2025, Coherent Corp began the initial revenue shipments of its Optical Circuit Switch (OCS). With the global OCS market expected to see a CAGR of 11.6% in 2025-2030, we expect the rising demand for high bandwidth and data transmission rates to facilitate COHR’s growth in this front.

Coherent Corp expects the multi-year agreement with Apple for a new generation of Vertical-Cavity Surface-Emitting Laser products to contribute toward its top line in the second half of 2026. This partnership not only secures a long-term customer but also highlights the strategic need of the company’s U.S. manufacturing footprint.

In the communications front, the company’s revenues increased 42% year over year in the fourth quarter of fiscal 2025 and 23% in the full year. This growth can be attributed to the demand for new 100-gig, 400-gig and 800-gig ZR/ZR+ coherent transceivers. Management expects these products to boost the company’s top line throughout fiscal 2026 and beyond.

Coherent Corp: Attractive Valuation, Strong Financials

The COHR stock is appealing to investors due to its discounted valuation. It is priced at 19.02 times forward 12-month earnings per share, which is lower than the industry’s average of 25.94 times. When looking at the trailing 12-month EV-to-EBITDA ratio, COHR is trading at 11.98 times, below the industry’s average of 36.38 times.

In the profitability front, COHR performs extremely well compared with the industry. Return on equity (ROE) of 12.2% exceeds the industry’s 6%. The company’s return on invested capital (ROIC) of 6.1% stands way ahead of the industry’s -9.1%. These metrics are highly appealing to investors, suggesting return maximization.

Coherent Corp’s liquidity position looks strong as well. In the fourth quarter of fiscal 2025, COHR’s current ratio of 2.19 stands substantially higher than the industry’s 1.81. The company’s liquidity exceeds its industry peers, Microvast’s 0.83 and Vimeo’s 1.59. That being said, a current ratio of more than 1 hints that the company can efficiently pay off its short-term obligations.

COHR’s Prospect Bright: Understanding Top & Bottom Lines

Coherent Corp’s consensus mark for fiscal 2026 revenues is at $6.7 billion, indicating 9.7% year-over-year growth. For fiscal 2027, 13.8% growth is expected. The Zacks Consensus Estimate for fiscal 2027 EPS is pegged at $4.55, hinting at a 28.9% year-over-year rise. The same is anticipated to rise 33.1% in fiscal 2027.

Over the past 60 days, three EPS estimates for both fiscal 2026 and 2027 have been revised upward, with one downward adjustment for fiscal 2026 and nil for 2027. In the same period, the Zacks Consensus Estimate for fiscal 2026 earnings has grown 3.9%, and the fiscal 2027 estimate has risen 11.6%. These upward revisions highlight analysts' confidence.

Buy Coherent Corp Now

COHR looks solid on the data center and communication front, with new products expected to boost the top line in the coming months. New partnerships and a surge in data transmission rates are anticipated to provide an impetus to Coherent Corp’s performance.

The company is fundamentally strong, and its discounted valuation is highly appealing to investors. That being said, COHR’s profitability and liquidity position exceed the industry average, making it an attractive proposition.

Banking on these factors, we recommend investors buy this stock now and expect a generous return in the future as the stock continues to ride the tide.

COHR currently flaunts a Zacks Rank of #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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