Coherent Stock Plunges 19.6% on $2.6B Trading Volume Ranks 23rd as Strategic Shift to AI Photonics Spurs Analyst Divisions

On August 14, 2025, Coherent (COHR) fell 19.61% with a trading volume of $2.60 billion, ranking 23rd in market activity. The decline followed the company’s announcement to sell its Aerospace and Defense business to Advent for $400 million, a move aimed at refocusing on core growth markets. Proceeds from the sale will reduce debt and immediately boost earnings per share (EPS). The unit, which includes 550 employees and 10 locations, had previously been deemed non-strategic for long-term goals.

The transaction, expected to close in Q1 2026, aligns with Coherent’s strategy to prioritize photonics and laser technologies for AI datacenters. Recent earnings highlighted strong performance, with Q4 revenue of $1.53 billion, a 16.4% year-over-year increase, and non-GAAP EPS rising 191% to $3.53. Despite GAAP net losses of $80.6 million for the full fiscal year, driven by $160 million in restructuring charges and an $85 million impairment on the divested unit, the Networking segment saw 49% revenue growth to $3.4 billion, underscoring demand for high-margin products.

Analysts remain divided on the stock’s outlook. Bank of America downgraded Coherent to Neutral with a raised price target of $105, while Needham and Stifel maintained Buy ratings with targets at $120 and $118, respectively. CEO Jim Anderson noted the semiconductor tariff exemptions could benefit Coherent’s datacenter-related products, though the impact on Q1 remains uncertain. The company’s cash flow generated $437 million in debt repayments, but rising current liabilities—up 33% year-over-year to $1.8 billion—highlight liquidity risks tied to working capital expansion.

The strategy of buying the top 500 stocks by daily trading volume and holding them for one day from 2022 to 2025 yielded a compound annual growth rate of 6.98%, with a maximum drawdown of 15.59%. While the approach showed steady growth, the significant mid-2023 downturn underscores the need for risk management, even in high-volume trading strategies.