Is Coherent Well-Positioned to Sail Through the EV Wave?

Coherent Corp. COHR holds a leading position in Silicon Carbide (SiC) substrates for power electronics, which enhance the energy efficiency of electric and hybrid-electric vehicles. Its laser technology is also utilized in battery manufacturing. The rising demand for EVs has been a key factor in driving the EV battery market, which is expected to see a CAGR of 9.6% from 2024 to 2035. This expanding market can act as a key enabler for COHR to leverage its offerings and capture a larger piece of the market.

Coherent strengthened its position in the EV space in late 2023 by receiving a $1-billion investment from DENSO and Mitsubishi Electric Corporation to scale manufacturing of SiC power electronics on a 200 mm technology platform. The recent announcement to sell the aerospace and defense business to Advent for $400 million provides the company with an opportunity to reduce debt and invest in AI and EV research and development (R&D).

Despite these positives, COHR experienced a setback in the form of a 6% year-over-year decline in its Materials segment’s revenues in 2025. A softer automotive and SiC end market demand led to this decline, indicating that navigating the EV market purposefully will be a long-term strategy for Coherent.

While COHR’s laser welding and SiC have laid a strong foundation for its long-term growth in the EV sector, the market is fiercely competitive. Rivals like Cognex CGNX and Applied Materials AMAT, focusing on automated, highly precise manufacturing of modern electronic devices and other advanced products, pose a threat to Coherent’s market share. To stay ahead of the competition, we expect Coherent to invest heavily in R&D and focus on developing next-gen battery technology like Lithium-Sulfur batteries and monetize its SHARP technology for Lithium battery waste.

COHR’s Price Performance, Valuation & Estimates

Over the past year, Coherent stock has gained 18.8%. While it failed to surpass the 75.4% rally of its industry, COHR improved marginally higher than the Zacks S&P 500 Composite’s 18.3% hike. When compared with competitors, COHR has exceeded Cognex’s 14.5% growth and Applied Materials’ 13.6% dip.

1-Year Price Performance

From a valuation perspective, COHR trades at a forward price-to-earnings ratio of 18.2X, lower than the industry’s 26.52X. Applied Materials appears more affordable, with a forward price-to-earnings ratio of 16.6X, while Cognex, with 43.23X, looks expensive.

P/E - F12M

Coherent Corp and Applied Materials has a Value Score of C, while Cognex carries a D.

The Zacks Consensus Estimate for COHR’s earnings for fiscal 2026 and 2027 has increased 4.1% and 11.2%, respectively, over the past 60 days.

COHR currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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