Coherent Surges 61% in a Year: Should You Bet on the Stock Now?

Core Insights - Coherent Corp.'s stock price has increased by 60.9% over the past year, significantly outperforming the industry growth of 5.7% and the S&P 500 Composite's rise of 16.6% [1] - The company has also outperformed peers such as Byrna Technologies and Industrial Tech Acquisitions, which saw declines of 0.9% and 11%, respectively [1] Stock Performance - Over the past month, Coherent's stock has risen by 12.4%, surpassing the slight dip of Industrial Tech Acquisitions and the 10.9% growth of Byrna Technologies [4] Growth Catalysts - The AI datacenter business has shown strong demand, with a 23% year-over-year revenue increase in the first quarter of fiscal 2026 [5] - The CEO indicated broad adoption of 800G and rapid adoption of 1.6T transceivers, expecting significant growth in these products in 2026 [6] - The production yield of 6-inch indium phosphide (InP) is higher than that of 3-inch InP, with plans to double internal production capacity in 2026 [7][8] - The Optical Circuit Switch (OCS) platform is projected to add over $2 billion in addressable market opportunity, with sequential revenue growth expected [9] - Demand for ZR/ZR+ DCI-focused products, including 100G, 400G, and 800G transceivers, is anticipated to continue growing [10] Financial Position - As of September 2025, Coherent held $875 million in cash reserves against a current debt of $48 million, indicating strong liquidity [11] - The current ratio was 2.33, up 6.4% from the previous quarter, exceeding the industry average of 1.54 [11] Revenue and Earnings Outlook - The Zacks Consensus Estimate for fiscal 2026 revenues is $6.7 billion, reflecting a 15.2% year-over-year growth, with fiscal 2027 expected to grow by 14.6% [13] - The consensus estimate for fiscal 2026 EPS is $5.02, indicating a 42.2% year-over-year growth, with fiscal 2027 EPS expected to increase by 25% [13] - Over the past 60 days, there have been upward revisions in EPS estimates for both fiscal 2026 and 2027, highlighting analyst confidence [14] Investment Recommendation - Coherent is positioned for rapid growth in 2026, driven by demand for 800G and 1.6T transceivers, advancements in InP production, and the OCS platform [15][16] - The strong balance sheet and positive growth outlook suggest that investors should consider buying the stock for potential long-term returns [17]