COHR

Analysis of Coherent Corp (COHR)

Technical Perspective COHR exhibits high volatility with a remarkable 55% surge over three months, significantly outperforming the broader market. However, the stock has recently pulled back 4% and trades near the top of its 52-week range, suggesting it may be overbought after such a rapid ascent. The high beta of 1.835 indicates sensitivity to market swings, requiring investor readiness for potential short-term turbulence.

Fundamental Health Fundamentally, COHR shows strong recent quarterly performance with revenue of $1.58 billion and a healthy net profit margin of 14.3%, reversing a previous quarterly loss. The company maintains solid liquidity with a current ratio of 2.33 and manageable debt levels. However, operational efficiency presents challenges, notably a lengthy cash conversion cycle of 122 days and low return on equity of 2.7%, indicating room for improvement in asset utilization.

Valuation & Risk Assessment Valuation presents a mixed picture: while the forward P/E of 18.5 appears reasonable, the trailing P/E of 126 and high EV/EBITDA of 57.2 suggest the market prices in substantial future growth not yet realized. Primary risks include the stock's high volatility and a significant 53% maximum drawdown over the past year, highlighting potential for sharp declines during market stress.

Investment Recommendation COHR represents a high-risk, growth-oriented opportunity suited for investors comfortable with volatility. The improving profitability and reasonable forward valuation are positive, but current prices appear to anticipate significant future earnings expansion. Investors should consider a position only if they believe in the company's ability to rapidly grow into its valuation while withstanding potential price swings. A cautious approach, perhaps waiting for a more attractive entry point, may be prudent given the recent run-up and operational inefficiencies.

RockFlow Model Forecast: Three Scenarios for 2026

Based on the comprehensive analysis, the 12-month outlook for Coherent Corp (COHR) is cautiously optimistic but carries significant volatility risk. Key catalysts will be the company's ability to sustain its recent strong revenue growth and expand its net profit margin, demonstrating it can grow into its lofty valuation. The primary risks remain its high beta and susceptibility to market downturns, amplified by operational inefficiencies like the lengthy cash conversion cycle. Given the lack of a definitive analyst target and the stock's overbought technical condition after a 55% surge, investors should expect heightened volatility with a potential trading range of $150 to $220, heavily dependent on broader market sentiment and quarterly execution. A pullback to the lower end of this range could provide a more attractive risk-reward entry point.

Wall Street Consensus

Most Wall Street analysts are optimistic about COHR's 12-month outlook, with consensus target around $184.11, indicating expected upside potential.

Overall, COHR has investment potential but also faces challenges. Here are key factors to weigh before investing.

COHR has demonstrated dramatic volatility over the past year, ultimately delivering exceptionally strong 3-month performance despite a recent pullback from its highs.

The stock's short-term performance is conflicting, with a 55.32% surge over three months significantly outperforming the market by 51.95%, yet it has retreated 4.27% over the past month. This recent dip suggests potential profit-taking following the steep rally.

Currently trading near the top of its 52-week range at approximately 95% of its peak, the stock appears overbought after such a rapid ascent. The high beta of 1.835 confirms its inherent volatility, making it susceptible to sharp swings even from this elevated position.

Of course. Here is a fundamental analysis of COHR based on the provided data.

1. Revenue & Profitability

COHR demonstrated solid performance in its most recent quarter (Q1 2026), with revenue reaching $1.58 billion and a strong net income of $226.3 million, translating to a healthy net profit margin of 14.3%. This represents a significant improvement from the prior quarter (Q4 2025), which showed a net loss. The company maintains a robust gross profit margin of 36.6%, indicating effective control over the cost of goods sold. Profitability metrics improved considerably, with the operating income ratio rising from 10.4% to 10.9%.

2. Financial Health

The company exhibits a strong liquidity position, with a high current ratio of 2.33 and a solid quick ratio of 1.39, suggesting it can comfortably meet its short-term obligations. Leverage appears manageable, with a debt-to-equity ratio of 0.42, indicating a balanced use of debt financing. However, the cash conversion cycle of 122 days is quite long, primarily driven by high days of inventory outstanding (147 days), which signals a substantial amount of capital is tied up in inventory.

3. Operational Efficiency

Operational efficiency presents a mixed picture. Return on Equity (ROE) is low at 2.7%, and asset turnover is also modest at 0.11, implying the company is not generating a high level of sales from its asset base. The exceptionally high days of inventory outstanding (147 days) points to potential challenges in inventory management or a business model with long production cycles. While the gross margin is healthy, these operational metrics suggest there is room for improvement in utilizing assets to drive profitability.

Valuation Level: Based on Coherent's current multiples, the stock presents a mixed valuation picture. While the trailing PE of 126.31 and elevated PB/PS ratios near 4.8 suggest significant overvaluation relative to current earnings, the more telling metrics are the sharply negative PEG ratio and very high EV/EBITDA of 57.2, indicating the market is pricing in substantial future growth that current fundamentals do not yet support. The forward PE of 18.5 provides a more reasonable benchmark, but the stark disconnect between trailing and forward earnings suggests investors are banking heavily on a dramatic near-term profitability improvement.

Peer Comparison: Without specific industry averages provided, I cannot conduct a meaningful peer comparison for Coherent's valuation multiples. A proper assessment would require comparable data points from similar companies in the photonics, lasers, or specialized materials sectors to determine whether Coherent's premium multiples are justified relative to industry norms or represent an outlier valuation. This comparative analysis is essential given the wide dispersion between the company's trailing and forward earnings multiples.

Volatility Risk: With a beta of 1.835, COHR is significantly more volatile than the broader market and is considered a high-risk stock from a systemic perspective. This elevated volatility is confirmed by its substantial 1-year maximum drawdown of -53.15%, indicating a severe potential for capital loss during market downturns over a relatively short period.

Other Risks: The absence of reported short interest suggests that professional traders do not currently see a strong, immediate thesis for a price decline. However, investors should still consider liquidity risks associated with trading volume and bid-ask spreads, while also monitoring for any emerging operational or sector-specific headwinds that could impact performance.