Core Viewpoint - Coherent (NYSE: COHR) reported its fourth consecutive earnings beat, with adjusted EPS of $0.74, exceeding expectations of $0.61, marking a 21.3% surprise and a significant recovery from previous losses [3][6]. Financial Performance - The company achieved a net income of $49.4 million in fiscal 2025, a turnaround from a loss of $156 million in the prior year, driven by revenue growth and disciplined cost management [6][8]. - Total quarterly revenue increased by 28% year-over-year, with datacom revenue surging 89% year-over-year, indicating strong demand in the AI datacenter market [4][8]. Margin Expansion - Gross margins improved to 35.2% in fiscal 2025, up from 30.9% in fiscal 2024, with management targeting sustained margins above 40% through pricing optimization and cost reduction initiatives [5][8]. - The margin expansion is seen as a key element of Coherent's transition from recovery to sustainable profitability, with a clear path to achieving higher margins [8]. Strategic Focus - Management emphasized a strategic transformation towards becoming a faster and more agile company, focusing on operational discipline and margin targets rather than aggressive growth [9][10]. - The company is cautious about future demand trends, particularly in the AI-driven market, and is prioritizing sustainable profitability over market share expansion [10][11]. Future Outlook - Coherent's near-term performance will depend on the robustness of datacom demand through calendar 2025 and the successful launch of 1.6-terabit transceivers [11]. - Analyst consensus suggests a target price of $121.79, indicating potential upside, although the stock's high beta of 1.88 suggests expected volatility [11].