AI Demand And Next-Gen Manufacturing Will Drive Broader Industry Performance Ahead

The analyst price target for Coherent has been raised from $115 to approximately $120.63, as analysts cite continued optimism around market demand and recent outperforming results across the high-speed optical connectivity space.

Analyst Commentary

Recent revisions in Coherent's price targets reflect both growing enthusiasm for the company's momentum in high-speed optical connectivity and measured caution regarding potential headwinds. Analysts have highlighted several key themes in their latest research updates.

• Bullish analysts are raising price targets, in some instances significantly. They are maintaining Positive and Buy ratings, indicating confidence in Coherent's ongoing value growth.
• Recent earnings reports have generally exceeded expectations. There is strength in core metrics such as revenue and adjusted EPS, especially in the high-performance optical connectivity and datacom segments.
• Sustained demand from artificial intelligence applications and the telecom sector is expected to drive further market share gains and support above-seasonal results in upcoming quarters.
• Emerging opportunities in new product categories and increasing adoption of higher-speed solutions are contributing to optimistic outlooks for both near-term execution and long-term growth potential.

• Bearish analysts caution that near-term growth could be tempered by macroeconomic factors, such as production cuts in key markets and shifting trade policies, which may impact demand in the automotive segment.
• Some outlooks highlight that recent stock appreciation has elevated expectations. Underwhelming results relative to newly established benchmarks could limit further upside.
• Despite positive momentum, there are concerns regarding ongoing volatility in certain end-markets and the potential for sharp market reactions to any perceived weakness in performance or guidance.

What's in the News

• Coherent announced the industry's first dual laser QSFP28 100G ZR solution, enabling broadband providers to maximize fiber capacity and expand bandwidth tenfold over existing infrastructure. The module, powered by the proprietary Steelerton DSP, will be available in Q4 2025. (Coherent Corp. Product Announcement)
• Major upgrades to the Multi-Rail technology platform were unveiled, including the introduction of a Dynamic Gain Equalizer that combines C and L bands in a single module to double transmission bandwidth and reduce footprint by 20 percent. Sampling is expected in late 2026. (Coherent Corp. Product Announcement)
• Breakthroughs in short-reach optical interconnects were demonstrated using new 2D VCSEL and photodiode arrays, meeting AI network demands with high-density, low-latency, and power-efficient links. Introduction of 1060 nm variants is planned for 2026. (Coherent Corp. Product Announcement)
• Coherent has entered a new multiyear supply agreement with Apple to produce vertical-cavity surface-emitting lasers (VCSELs) for Face ID on iPhones and iPads at its Texas facility. (Coherent Corp. Client Announcement)
• The company announced a multiyear partnership with Eudia to create a fully AI-native legal function, aiming to unify its legal systems under Eudia's Sigma suite and deploy advanced in-house AI solutions across key legal domains. (Coherent Corp. Client Announcement)

Valuation Changes

• Consensus Analyst Price Target has increased from $115 to approximately $120.63, reflecting a slightly higher target valuation.
• Discount Rate has risen marginally from 8.80 percent to 8.82 percent, indicating a minimal change in risk assessment.
• Revenue Growth projections remain essentially unchanged at 9.76 percent, suggesting analysts continue to expect steady top-line expansion.
• Net Profit Margin forecasts are also stable, moving only fractionally from 9.53 percent to 9.53 percent.
• Future P/E multiple has risen from 32.17x to 33.76x, pointing to a modestly higher valuation for expected future earnings.