Coherent Corp. (COHR): A Bull Case Theory

We came across a bullish thesis on Coherent Corp. on Make Money, Make Time’s Substack by Oliver | MMMT Wealth. In this article, we will summarize the bulls’ thesis on COHR. Coherent Corp.'s share was trading at $184.11 as of Janaury 14th. COHR’s trailing P/E was 259.31 according to Yahoo Finance.

Coherent Corp. (COHR) is a critical supplier in the optical communications value chain, positioned at the heart of the AI-driven data center buildout through its leadership in laser light sources and photonic components. The company specializes in Indium Phosphide–based lasers, supplying the core laser chips and photonic engines that are embedded inside high-speed optical transceivers.

These components are essential for enabling faster data transmission across hyperscale and AI-focused data centers, making COHR a leveraged beneficiary of accelerating bandwidth and compute demand. In addition to its laser leadership, COHR is also a vertically integrated transceiver manufacturer following its acquisition of Finisar, giving it scale, customer access, and control across both components and finished optical modules.

Financially, COHR is entering a phase of operating leverage as demand normalizes and higher-speed optical platforms ramp. Revenue is estimated to grow around 15% in FY26, while EBITDA is expected to grow faster at roughly 25%, reflecting margin expansion from mix shift, improved utilization, and cost discipline.

Net income margins of approximately 9.7% indicate that profitability is already established, differentiating COHR from smaller, less stable competitors. While the stock trades at 5.2x NTM EV/Sales and 21.3x NTM EV/EBITDA, these multiples reflect its strategic positioning, proprietary technology, and exposure to structurally growing end markets rather than cyclical optical spending alone.

At 36.4x NTM P/E, valuation may appear demanding, but it is supported by durable growth, vertical integration, and COHR’s role as a foundational supplier rather than a commoditized assembler. As AI workloads continue to drive higher-speed optical adoption, COHR’s Indium Phosphide expertise and manufacturing scale position it for sustained growth and margin expansion, supporting a constructive long-term outlook.

Previously, we covered a bullish thesis on Wolfspeed, Inc. (WOLF) by Moist-Clerk in October 2024, which highlighted its shift to silicon carbide and gallium nitride technologies, Mohawk Valley Fab expansion, and positioning in EVs, renewable energy, and 5G. WOLF’s stock has appreciated approximately 20.23% since our coverage. Oliver | MMMT Wealth shares a similar approach but emphasizes Coherent Corp.’s (COHR) role in optical communications and AI-driven data center demand.

Coherent Corp. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 78 hedge fund portfolios held COHR at the end of the third quarter which was 66 in the previous quarter. While we acknowledge the potential of COHR as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.