Coherent Corp (NYSE:COHR) shares tanked in early trading on Thursday, after the company reported its fiscal fourth-quarter results.

The company reported higher-than-expected results, with Data Center segment sales accelerating with laser supply from its 6-inch fab flowing through to volume transceiver shipments, according to Needham.

• Coherent shares are retreating from recent levels. What’s weighing on COHR shares?

The Coherent Analyst: Analyst Ryan Koontz reiterated a Buy rating and lifted the price target from $380 to $420.

The Coherent Thesis: While the company is a "major AI infrastructure beneficiary," it needs to continue improving execution amid "high demand and even higher investor expectations," Koontz said in the note.

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Koontz highlighted the following from Coherent’s quarterly results:

  • Revenue grew 34% year-on-year and 13% sequentially to $2.05 billion.
  • The figure came in above consensus of $1.98 billion.
  • Non-GAAP earnings of $1.74 per share beat consensus of $1.62 per share.
  • Data Center and Communications revenue came in at $1.615 billion, with growth accelerating to 59% year-on-year, from 41% in the previous quarter, driven by "continued strong demand from AI hyperscale and cloud customers."
  • Data Center revenue growth accelerated to 66% year-on-year and 24% sequentially, driven by both 1.6T and 800G transceivers.

"The ramp of 6-inch InP wafer fabs continues as 50% of InP output is now from 6-inch and 50% from 3-inch," the analyst wrote.

Laser unit growth of 80% year-on-year in the latest quarter signals Data Center growth in the September quarter, he added.

Outlook: For the first quarter of fiscal 2027, Coherent guided to:

  • Revenue in a range of $2.20-$2.40 billion, above consensus of $2.13 billion.
  • Non-GAAP gross margin of 39.5%-41.5%, up 30 basis points (bps) at the midpoint.
  • Non-GAAP earnings of $1.85-$2.05 per share, above consensus of $1.77.

"We expect investors to be disappointed with the GM ramp which we believe is dampened by weaker transceiver GMs despite higher mix of 1.6T," the analyst further wrote.

COHR Price Action: Shares of Coherent had declined by 4.69% to $339.07 at the time of publication on Thursday.

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