Coherent Surges 61% in a Year: Should You Bet on the Stock Now?

Coherent Corp.'s COHR stock price has increased 60.9% in a year, outperforming the industry's 5.7% growth and the Zacks S&P 500 Composite’s 16.6% rise.

COHR has outperformed its industry peers, Byrna Technologies BYRN and Industrial Tech Acquisitions’ ARBE 0.9% and 11% declines, respectively.

1-Year Share Price Performance

The recent performance also presents a positive outlook for Coherent, as it has outperformed Byrna Technologies and Industrial Tech Acquisitions. Over the past month, COHR has risen 12.4%, exceeding Industrial Tech Acquisitions’ slight dip and Byrna Technologies' 10.9% growth.

Let us analyze this stock further to conclude whether investors should ride the wave or stay away from it.

COHR’s Growth Catalysts: Datacenter, InP, OCS & DCI

Coherent’s AI datacenter business displayed strong demand in the first quarter of fiscal 2026, evidenced by a 23% year-over-year increase in its revenues. The company experienced consistently high demand that increased exponentially due to an influx of direct bookings.

During the recent earnings call, James Anderson, the CEO, disclosed that the company experienced the broad adoption of 800G and rapid adoption of 1.6T transceivers, confirming robust demand for its products. This robust demand compelled the CEO to expect its 800G and 1.6T transceivers to escalate considerably in 2026.

The company’s 6-inch indium phosphide (InP) production yield was higher than the 3-inch InP yields. It reflects the production team’s experience gained over the past five years, manufacturing 2 billion VSCEL devices on its 6-inch gallium arsenide technology. Banking on the strong yields of 6-inch InP, COHR moved ahead and started production at Jarfalla, Sweden, ramping up overall production capacity.

Management expects the total internal production capacity of InP to double in 2026. The combination of internal production and external suppliers will aid COHR in addressing the rising demand for optical components.

The Optical Circuit Switch (OCS) platform is another area of growth that progresses with expanding customer engagement. During the recent earnings call, management stated that this product line adds more than $2 billion of addressable market opportunity over the coming years. The company has witnessed sequential growth in revenues and backlog in the first quarter of fiscal 2026 and expects to rise exponentially in the year.

Coherent continues to observe robust growth in customer demand for its ZR/ZR+ DCI-focused products. This includes 100G, 400G and 800G ZR/ZR+ Coherent transceivers, which are growing swiftly with expectations of continued growth in the next year. All in all, the strong product demand collectively positions COHR for a significant growth opportunity in 2026.

Coherent’s Strong Balance Sheet Position

As of September 2025, Coherent held $875 million in cash reserves while its current debt is substantially lower at $48 million. This cash cushion provides safety and flexibility, suggesting easy coverage of short-term obligations. Coherent current ratio reveals a similar picture. In the first quarter of fiscal 2026, COHR’s current ratio was 2.33, up 6.4% from the previous quarter, surpassing the industry average of 1.54.

COHR’s Strong Top & Bottom-Line Outlook

The Zacks Consensus Estimate for COHR’s revenues for fiscal 2026 is set at $6.7 billion, indicating 15.2% year-over-year growth. For fiscal 2027, the top line is anticipated to grow 14.6% from the year-ago quarter. The consensus mark for fiscal 2026 EPS is pegged at $5.02, indicating 42.2% year-over-year growth. For fiscal 2027, the bottom is expected to gain 25% year over year.

Over the past 60 days, seven and five EPS estimates for fiscal 2026 and 2027 have been revised upward, respectively, without downward adjustment. In the same period, the Zacks Consensus Estimate for fiscal 2026 earnings increased 9.6%, and the estimate for fiscal 2027 gained 4%, highlighting analyst confidence.

Buy Coherent Corp Now

COHR is positioned to grow rapidly in 2026, fuelled by four major catalysts. Rising demand for 800G and 1.6T transceivers raised AI datacenter revenues. Transitioning to 6-inch InP and production across two sites significantly improves the company’s caliber to meet customer demand.

The OCS platform has added nearly $2 billion to COHR’s addressable market. Finally, consistent demand for ZR/ZR+ DCI-focused transceivers adds to the company’s growth trajectory.

Alongside these structural growth drivers, Coherent’s balance sheet position reveals elevated levels of liquidity, which, when combined with its strong fundamental outlook, becomes a major green flag for investors.

These positive factors compel us to recommend that investors buy this stock now and enjoy elevated returns in the long run.

COHR currently has a Zacks Rank of #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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