Key Takeaways
- Coherent fell 16% today despite a revenue beat, a raised outlook and a roughly $20 billion optics deal.
- Ciena and Credo Technology fell too, in an AI-stock selloff tied to Democrats’ midterm wins.
- Analysts expected normalized EPS to rise 68% in fiscal 2027, and Coherent’s guidance points higher.
- Cash is the risk: operating cash flow turned negative.
Coherent (COHR) stock is down 16% today, the morning after a revenue beat and a raised outlook.
AI hardware stocks extended a selloff sparked by Democrats’ midterm wins, taking Ciena (CIEN) down 16% and Credo Technology (CRDO) down 17%.
Coherent did its part
Revenue rose 50% to $2.37 billion in the quarter ended Sept. 30, and non-GAAP EPS jumped 80% to $2.09. Management guided December-quarter revenue to $2.55 billion-$2.75 billion, above the $2.54 billion analysts expected.
It also disclosed a PhotonLink agreement valued at about $20 billion over five years (a hyperscaler deal, per B. Riley).
Analysts already expected steep earnings growth through fiscal 2028:
That’s 68% growth in fiscal 2027 alone, and a guide this far above consensus should push estimates higher.
TIKR tracks 26 analysts on Coherent. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Coherent, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Coherent’s Analyst Ratings
The market is pricing AI funding
B. Riley explained the disconnect: “the group’s multiples are now driven more by sentiment on AI funding than by quarterly results.”
Coherent’s forward P/E was 21x at Wednesday’s close, down from 57x in June and below its five-year average of 24x:
At today’s price, it’s even lower.
Coherent’s datacenter and communications revenue grew 79%, so AI customers are still buying optical links. That bodes well for Ciena, which raised its fiscal 2026 revenue guide to $6.42 billion in September, and for Credo, which guided its fiscal second quarter to $525 million-$535 million after its revenue more than doubled.
Bloom Energy’s drop looks like pure sentiment: it announced a 900 MW deal with NTT DATA this morning and fell anyway. And Applied Materials (AMAT) fell 12% with no news, though Coherent reported a notable bookings uptick for its parts in front-end chip equipment, a good sign for Applied.
Buy the business, watch the cash
The blemish: operating cash flow was negative $93 million in the quarter as capex hit $776 million and inventory rose to $3.3 billion. That’s the cash burn test Coherent still hasn’t passed.
With its outlook rising and the stock below its usual multiple, I’d buy this election-driven drop.
Of course, multiples could keep shrinking until AI-funding worries ease, and the December-quarter report in early February needs to show cash coming in.
So what is Coherent stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
