Key Takeaways
- Coherent shares jumped 18% today with no company news, as AI hardware stocks rebounded.
- Lumentum, Astera Labs and Nebius rose too, even as Nvidia fell on its board’s probe of CEO Jensen Huang.
- Coherent still guides for more than 60% pro forma revenue growth in fiscal 2027.
- Cash flow is the risk, and its early-February report is the next test.
Coherent (COHR) stock jumped 18% today without a word from the company. AI hardware stocks bounced back from last week’s selloff, lifting Lumentum (LITE), Astera Labs (ALAB) and Nebius Group (NBIS) with it, even as Nvidia slid on its CEO’s troubles.
A relief rally that left Nvidia behind
Last week’s drop came as Democratic midterm wins raised questions about data-center building in states where opposition over power bills and water use has grown. This morning, investors went bargain hunting. Nvidia fell 5% after its board opened an independent investigation following reports that Huang was the target of a foreign intelligence effort. Lumentum’s 12% gain also tracks Marvell, which is buying it in an all-stock deal and is up 9%.
Coherent’s guide hasn’t budged
Coherent’s fiscal first-quarter revenue rose 50% to $2.37 billion, and it expects pro forma revenue growth above 60% in fiscal 2027 (the year to June). It also signed a roughly $20 billion, five-year PhotonLink deal with a hyperscaler, per B. Riley. Analysts expect revenue to more than double from fiscal 2026 to fiscal 2028:
At Friday’s close, the stock traded at 17x forward earnings, well below its five-year average of 24x:
At today’s price, it’s higher, but still under that average.
Coherent has company there. Astera Labs reported third-quarter revenue of $584.9 million on Nov. 3, up 154%, and still lost 26% in the week before today’s 14% bounce. Arista Networks (ANET), up 10%, grew third-quarter revenue 58.5% to $3.66 billion, ahead of its $3.3 billion guide.
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 catch is the cash
Keeping up with AI demand costs plenty. Coherent’s operating cash flow was negative $93 million in the September quarter, while it spent $776 million on capex and inventory rose to $3.3 billion. Its 40.6% non-GAAP gross margin also trails Lumentum’s 53.2%.
A discount worth taking
That discount looks worth taking to me, since Coherent’s guide held through every swing. Until operating cash flow catches up with spending, though, each AI scare will hit the stock hard. Nebius, up 8%, reports Thursday, Nov. 12. Coherent reports in early February, when cash flow and inventory should show whether its stocked parts are selling.
So what is Coherent stock actually worth?
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Disclaimer:
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