Coherent Stock Jumps 31% in 6 Months: How Should Investors Play?

Core Viewpoint - Coherent Corp. (COHR) has shown significant stock price growth over the past six months, outperforming some industry peers but still lagging behind the overall industry rally [1][4]. Financial Performance - COHR's stock price increased by 30.6% over the past six months, while the industry saw a 74.6% increase and the Zacks S&P 500 composite grew by 11.7% [1]. - The stock closed at $87.3, which is 23.2% lower than its 52-week high of $113.6 [4]. - The company generated an average of 53% of its revenues from the communications market, with a 6.3% quarter-over-quarter increase and a 58.3% year-over-year increase in Q2 of fiscal 2025 [5]. - The Zacks Consensus Estimate for fiscal 2025 revenues is $5.7 billion, indicating a 21% growth from the previous year, while fiscal 2026 revenues are expected to rise by 9.9% [13]. Market Dynamics - The communications market is projected to expand at a CAGR of 14% from 2023 to 2028, with a total addressable market of $23 billion [5]. - COHR operates in two segments: telecom and datacom, benefiting from rising investments in cloud infrastructure and increasing demand for AI and ML [6]. Valuation Metrics - COHR's stock is currently priced at 22.9 times forward 12-month earnings per share, significantly lower than the industry average of 48.9 times [8]. - The trailing 12-month EV-to-EBITDA ratio for COHR is 12.9 times, compared to the industry's average of 102.1 times [10]. Liquidity Position - The company has a strong liquidity position with a current ratio of 2.67, higher than the industry average of 2.21, indicating efficient short-term debt coverage [12]. Growth Prospects - The consensus estimate for earnings in fiscal 2025 is $3.47 per share, suggesting over 100% year-over-year growth, with a 24.6% increase expected in fiscal 2026 [14]. - COHR is well-positioned to capitalize on the expanding communications market, which may enhance its market share and strengthen its leadership [15].