Key Takeaways
- Coherent shares rose 6% today after Fabrinet reported a 51% revenue jump and guided above Wall Street’s forecast.
- Fabrinet’s data center revenue grew 78%, close to the more-than-80% growth Coherent guided for its own data center sales.
- Marvell’s $115 billion deal for Lumentum leaves Coherent as the big laser maker not tied to a chip designer.
- Coherent reports Nov. 4, and cash flow is the main risk after negative free cash flow of $1.0 billion in fiscal 2026.
Coherent (COHR) is up 6% today after contract manufacturer Fabrinet (FN) reported a record quarter, winning back Monday’s 5% drop, the day Marvell Technology (MRVL) agreed to buy rival Lumentum (LITE) in a $115 billion all-stock deal.
Fabrinet had its best quarter ever
For the quarter ended Sept. 25, Fabrinet reported:
- Revenue of $1.47 billion, up 51%
- Data center revenue of $777 million, up 78%
- A December-quarter guide of $1.6-$1.65 billion, against the $1.48 billion analysts expected
Coherent already set a high bar
In August, Coherent guided September-quarter revenue of $2.2 billion to $2.4 billion, with data center revenue up more than 80%. After Fabrinet’s 78%, that looks reachable to me.
Analysts expect Coherent’s normalized EPS to climb from $5.61 in fiscal 2026 (the year to June) to $9.42 in fiscal 2027 and $13.97 in fiscal 2028.
I see nothing in Fabrinet’s quarter that should cut those numbers. But Fabrinet has many customers, and some of its 78% may have come from Coherent’s rivals.
Coherent traded at 21x forward earnings at Monday’s close, under its five-year average of 24x and far off June’s 57x.
At today’s price, it’s a bit 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
Marvell just priced Lumentum at $115 billion
Based on Oct. 28 prices, that’s what Marvell agreed to pay for a business guiding December-quarter revenue of $1.575 billion to $1.625 billion. Coherent guided to more than that for its September quarter, and its market value is about a third of the deal price.
Investors aren’t sold: Marvell fell 13% and Lumentum 19% on Monday. Once the deal closes, Marvell will sell lasers and transceivers alongside its chips. That leaves Coherent as the big laser maker not tied to a chip designer. Will customers wary of buying from a chipmaker send Coherent more orders?
Watch the cash on Wednesday
Coherent reports after the close on Nov. 4. I expect demand to hold up, so I’d watch operating cash flow, which was just $69.5 million in the June quarter against $555.7 million of capex.
Of course, one strong quarter at Fabrinet doesn’t guarantee one at Coherent.
So what is Coherent stock actually worth?
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