Coherent Shares Plummet 20% Amid Datacom Concerns, Analysts Remain Bullish

Coherent's shares fell 20% after its financial results due to concerns over its market share in datacom offerings. Despite this, analysts remain bullish on the company.

Coherent Corp. (NYSE: COHR) saw its shares fall by 20% following the release of its fourth-quarter and full-year fiscal 2025 financial results. Despite the company's robust performance, investors expressed concern over its market share in data center and communications (Datacom) offerings. Analysts, however, remain optimistic about the company's long-term prospects.

Coherent reported record annual revenue of $5.81 billion, a 23% year-over-year increase [2]. The company's non-GAAP gross margin improved by 358 basis points to 37.9%, while non-GAAP EPS reached $3.53, up $2.32 from the previous year. The fourth-quarter revenue was $1.53 billion, with a non-GAAP gross margin of 38.1% and non-GAAP EPS of $1.00 [2].

The company's strong performance was primarily driven by the Data Center & Communications segment, which grew 39% year-over-year. However, concerns were raised over Coherent's market share in Datacom transceivers. Needham analysts noted that while Coherent gained market share in Datacom transceivers throughout fiscal 2025, this assessment contrasts with recent data points from industry peers [1].

Despite the market share concerns, analysts remain bullish on Coherent's growth potential. Needham reiterated its Buy rating and $120.00 price target, citing strong secular tailwinds benefiting the broader industry. The firm highlighted that Coherent’s first-quarter revenue guidance of 15% year-over-year growth appears less impressive compared to competitor Lumentum’s networking growth [1].

Stifel and Raymond James also adjusted their price targets, maintaining positive sentiments. Stifel raised its price target to $118 while maintaining a Buy rating, citing strong earnings performance. Raymond James increased its price target to $134 and maintained a Strong Buy rating, highlighting strong performance in the Data Center & Communications (DCI/ZR) segment [1].

Coherent's data center and communications segment showed continued strength, particularly in 800G products. The company's CEO, Jim Anderson, noted that Coherent is well-positioned to drive strong revenue and profit growth over the long term, given its exposure to key growth drivers such as AI datacenters [2].

References:
[1] https://www.investing.com/news/analyst-ratings/coherent-stock-rating-reiterated-at-buy-by-needham-on-strong-data-center-growth-93CH-4191777
[2] https://www.stocktitan.net/news/COHR/coherent-corp-reports-fourth-quarter-and-full-year-fiscal-2025-12sikxrj07sy.html