Key Stats for Coherent Stock
- Current Price: $306.43
- Street Target: ~$413
- Target Price (Mid): ~$1,060
- Potential Total Return: ~245%
- Annualized IRR: ~29% / year
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What Happened?
Coherent (COHR) closed at $306.43 on August 18, down 12.75% in a single session. The timing is what stands out. The company reported a record quarter on August 12. Shares then climbed toward $356 over the next few days, and analysts raised their targets on the way up. The 13% drop came after all of that, on August 18, in a day with no company-specific news, as the whole AI optics group sold off together.
Peers like Lumentum and Applied Optoelectronics fell in the same session, which points to sector-wide profit-taking after a parabolic run rather than a Coherent problem. So the company is coming off its best quarter ever, the freshest analyst targets sit at $420, and the stock trades at $306, below the Street’s average target of roughly $413.
The Drop Was Positioning, Not a Downgrade
Coherent posted fiscal Q4 revenue of $2.05 billion, up 33.75% year over year, and non-GAAP EPS of $1.74, beating the $1.62 consensus. Full-year revenue hit a record $7.12 billion with EPS of $5.61, up 59%. The guidance was the strongest part of the print, and it beat on both lines. Management guided fiscal Q1 revenue to around $2.3 billion at the midpoint, well above the roughly $2.1 billion analysts expected heading into the report, and guided EPS to a midpoint near $1.95 against a Street estimate of about $1.77.
Shares ran toward $356 by August 17, and analysts followed: Jefferies and Needham lifted their targets to $420, and Morgan Stanley moved to $375. Then, on August 18, much of the gain was wiped out in one session, with no fresh news and the rest of the optics complex falling alongside it.
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What a One-Day Chart Cannot Show
On the earnings call, CEO Jim Anderson said fiscal 2027 is “basically completely booked out,” with customer orders now extending into calendar 2028 and long-term agreements, many carrying take-or-pay commitments, running through the end of the decade. He added the company sees “no signs of attenuation in customer demand.” A supply ramp in indium phosphide, the laser material that gates data center growth, is running a quarter ahead of plan and feeds the gross margin expansion that took Q4 to 40.2%.
Co-packaged optics revenue is set to begin in the December quarter, optical circuit switching is ramping into a market Coherent sizes above $4 billion, and on August 17, the company began customer sampling of 300mm silicon carbide substrates aimed at cooling AI chips. That last item is a sampling milestone, not booked revenue, but it extends Coherent into the thermal problem every data center now faces.
Coherent trades at an NTM EV/EBITDA of 22.17x and an NTM P/E of 32.77x, roughly in line with Corning at 23.49x and Fabrinet at 20.99x rather than far above them. That is a shift from earlier in 2026, when the premium was extreme. The company still spends heavily, with $556 million of capital expenditure in Q4 and negative free cash flow to match. Management pegs the payback on data center investment at roughly 18 months. Hit that, and today’s price looks like a discount to the trajectory. Miss on the capacity ramp, and a still-premium stock has room to fall further.
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TIKR Advanced Model Analysis
- Current Price: $306.43
- Target Price (Mid): ~$1,060
- Potential Total Return: ~245%
- Annualized IRR: ~29% / year
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Using TIKR’s mid-case scenario, the model puts Coherent at roughly $1,060 by mid-2031, a total return near 245%, or about 29% annualized over 4.9 years. The two revenue drivers are data center transceivers, where the 800-gig and 1.6T ramp is gated only by an indium phosphide supply that is now expanding fast, and the newer platforms of optical circuit switching, co-packaged optics, and multi-rail moving from sampling to revenue across fiscal 2027. The margin driver is the shift to 6-inch wafers, which lowers per-device cost and supports the path toward a gross margin above 42%.
The primary risk is execution: the thesis assumes Coherent converts record bookings into shipped product without capital spending outrunning its cash generation. The upside is that demand visibility running to the end of the decade lets it grow into these numbers. The downside is that a supply stumble or a cooling in AI infrastructure spending leaves a premium stock exposed to more multiple compression.
Conclusion
Watch data center revenue growth when Coherent reports fiscal Q1, expected in the fall. Anderson said on the call he expects that growth to “exceed 80%” year over year this quarter, tied to an 80% jump in June-quarter laser production. Clear that bar and the ramp is working, and the gap to the Street’s $413 target reads as an opening. Come in soft, and the market will treat it as the first crack in a demand story that currently has none.
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Should You Invest in Coherent?
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Pull up Coherent, and you’ll see years of historical financials, what Wall Street analysts expect for revenue and earnings in the quarters ahead, how valuation multiples have moved over time, and whether price targets are trending up or down.
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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 stocks mentioned. Thank you for reading, and happy investing!
