COHR
Coherent Corp.
AI Optical Picks-and-Shovels
~$322
May 7, 2026 (fell 6.7% post-Q3 print) · Mkt Cap ~$66B
52W: $85 – $380
✦ STRONG ADD POST-PULLBACK
Entry zone: $300–330
800G and 1.6T optical transceiver supplier for hyperscaler AI networking. NVIDIA invested $2B (March 2026). Record bookings; backlog extends to calendar 2028. GAAP P/E misleading — use non-GAAP ~30-35× fwd.
Fwd P/E (non-GAAP)
30–35×
GAAP P/E
~316×
II-VI amortisation
Q3 FY26 Rev
$1.806B
+21% YoY
Q4 Guide
$1.91–2.05B
Non-GAAP EPS
$1.41
vs $1.43 est (miss)
Gross Margin
39.6%
Expanding
Analyst PT Range
$170–455
⚠ Wide dispersion
Next Earnings
~Aug 6
FQ4 FY26 · Est.
Valuation vs Growth
A
Non-GAAP fwd P/E ~30-35× on 30%+ EPS growth. PEG ~0.9. Q3 miss was $9.7M on $1.8B revenue (0.5%) — noise, not signal. Q4 guide midpoint $1.98B implies sequential acceleration. IO Fund entered $185 Dec 2025 (+72%).
Most compelling rerating in optical AI. Minor miss overreaction.
Fundamentals vs Hype
A
DC & Comms = 75% of revenue, +40%+ YoY. Gross margin expanding +105bps YoY. Record bookings. Backlog LTAs extending to end of decade. NVIDIA $2B equity investment (Mar 2026) validates strategic positioning. S&P 500 inclusion Mar 2026 = structural bid. 800G → 1.6T transition accelerating.
Grounded. Record backlog + NVIDIA partnership = real, not hype.
Institutional vs Retail
B+
84% institutional ownership. Top holders: FMR/Fidelity ~12%, Vanguard 7.45%, BlackRock 7.6%. Heavy insider selling (22 sales/0 buys 6mo) — but Bain Capital legacy distribution from II-VI conversion, not panic. S&P 500 passive bid. Not a retail darling.
Institutionally driven. Insider selling = technical, not signal.
Verdict
Strong Add on pullback. The 6.7% post-earnings drop on a 0.5% revenue miss vs $1.8B is a non-fundamental derate. Q4 guide acceleration to $1.91–2.05B (sequential +12%) is the more important signal. At $300-315 the risk/reward is asymmetric. PT range $170-455 reflects analyst uncertainty, not stock weakness.
Entry zone: $300–330 (current $322 is acceptable; $300-315 preferred)
⚠ Key Risks
- 01AI capex digestion: COHR is 75% hyperscaler-driven — any slowdown in MSFT/META/GOOG capex hits volumes directly
- 02Lumentum competition — NVIDIA also invested $2B in Lumentum (same day as COHR); margin pressure from duopoly dynamics
- 03Indium Phosphide ramp execution — capacity doubling by Q4 FY26; yield ramp risk
- 04PT range $170–455 is widest in cohort; represents analyst inability to model transition — high multiple compression risk if narrative cracks
- 05Industrial segment soft ($444M, down YoY) — mixed earnings quality; AI wins masking legacy weakness