Core Insights - Coherent Corp.'s Silicon Carbide (SiC) substrates are essential for enhancing energy efficiency in electric vehicles (EVs), with the global EV market projected to grow at a CAGR of 32.5% through 2030, presenting significant growth opportunities for the company [1][8] Investment and Financial Performance - Coherent secured a $1 billion investment from Denso Corporation and Mitsubishi Electric Corporation in late 2023, which included minority stakes in the SiC business and supply agreements for substrates and epitaxial wafers, enhancing the company's financial flexibility for SiC expansion [2] - The company reported a 17% year-over-year growth in revenue for the first quarter of fiscal 2026, with gross margin expansion of 249 basis points, following a 23% revenue increase and 400 basis points gross margin growth in fiscal 2025, driven by demand from AI-related datacenters and communications [3][4] Competitive Landscape - Despite strong growth indicators, Coherent faces competitive pressure from Cognex and Applied Materials in the battery process equipment sector, which could impact pricing and market share [5][8] Stock Performance and Valuation - Over the past year, Coherent's stock has increased by 58.5%, outperforming the industry average of 11.8% and surpassing Cognex's 4.7% decline and Applied Materials' 39% growth [6] - Coherent trades at a forward price-to-earnings ratio of 29.58X, which is higher than the industry's 25.22X, while Applied Materials and Cognex trade at 26.19X and 34.13X, respectively [10] - The Zacks Consensus Estimate for Coherent's earnings for fiscal 2026 and 2027 has risen by 9.6% and 3.9% over the past 60 days, indicating positive market sentiment [13]

Core Insights - Coherent Corp. (COHR) is a leader in Silicon Carbide (SiC) substrates for power electronics, which are crucial for enhancing energy efficiency in electric and hybrid-electric vehicles. The demand for EVs is driving the EV battery market, projected to grow at a CAGR of 9.6% from 2024 to 2035, providing opportunities for COHR to expand its market share [1]. Group 1 - Coherent received a $1 billion investment from DENSO and Mitsubishi Electric Corporation to scale SiC power electronics manufacturing on a 200 mm technology platform, strengthening its position in the EV sector [2]. - The company announced the sale of its aerospace and defense business to Advent for $400 million, allowing it to reduce debt and invest in AI and EV R&D [2]. - Despite positive developments, COHR faced a 6% year-over-year decline in its Materials segment revenues in 2025 due to softer automotive and SiC end market demand, indicating a long-term strategy is needed for navigating the EV market [3]. Group 2 - The competitive landscape includes rivals like Cognex and Applied Materials, which focus on automated manufacturing of advanced products, posing a threat to COHR's market share. To remain competitive, COHR is expected to invest in R&D and develop next-gen battery technologies such as Lithium-Sulfur batteries [4]. - Over the past year, COHR stock gained 18.8%, slightly outperforming the Zacks S&P 500 Composite's 18.3% increase, but lagging behind the industry’s 75.4% rally [5]. - COHR trades at a forward price-to-earnings ratio of 18.2X, lower than the industry average of 26.52X, with Applied Materials at 16.6X and Cognex at 43.23X [9]. Group 3 - The Zacks Consensus Estimate for COHR's earnings for fiscal years 2026 and 2027 has increased by 4.1% and 11.2%, respectively, over the past 60 days [11]. - COHR currently holds a Zacks Rank 2 (Buy), indicating positive market sentiment [12].