Coherent (COHR): Evaluating Valuation After China’s Critical Minerals Export Curbs Spark Supply Chain Concerns

Shares of Coherent (COHR) slid after China imposed new export controls on key minerals used in high-tech manufacturing. This move immediately rippled through supply chains exposed to cross-border restrictions.

See our latest analysis for Coherent.

This latest sell-off comes after a string of market-moving headlines for Coherent, including recent trade tensions between the US and China that have led to sharper price moves across major tech names. Even with today's sudden pullback, the stock still shows a 7% gain over the last month and is up nearly 19% over the past quarter. For long-term investors, the total shareholder return stands at 6% for the past year and an impressive 261% over three years. This suggests that, while sentiment has wavered lately, the company’s growth story is still being written.

If shifting global policy and trade headlines have you rethinking your watchlist, now’s a smart time to explore See the full list for free.

With recent volatility and analyst optimism pushing price targets higher, the question for investors now is whether Coherent’s future is being undervalued by the market or if the recent gains already reflect the company’s growth potential.

Most Popular Narrative: 3% Undervalued

With the most widely followed narrative setting a fair value at $115 versus a last close of $111.10, recent price moves leave a narrow gap that sparks debate over whether the market is catching up or the best is already baked in. The following insight gives a glimpse of the underlying drivers analysts are watching most closely.

Major investments in internal manufacturing, particularly the world's first 6-inch indium phosphide production line in Texas, are providing scale and cost structure advantages, as well as improved supply chain resiliency. This enables Coherent to boost volumes, lower production costs, and expand gross margins.

Read the complete narrative.

What’s really fueling this valuation? One crucial forecast stands out: explosive future earnings and a margin expansion few expect. Wondering which bold projections analysts are staking their valuations on? Uncover the dramatic financial leaps underlying this price target; they might just surprise you.

Result: Fair Value of $115 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, sustained pricing pressure from low-cost Asian competitors and potential revenue swings tied to major customers could quickly challenge Coherent’s positive outlook.

Find out about the key risks to this Coherent narrative.

Another View: Discounted Cash Flow Model Challengers

Switching perspectives, our SWS DCF model actually suggests Coherent is trading above its fair value, putting the current share price of $111.10 about 9% higher than the model’s estimate. This contrasts with the narrative that the stock is undervalued. Does this divergence highlight hidden optimism or lurking risk in today's price?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Coherent for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Coherent Narrative

If you see things differently or want to dig into the data yourself, you can build your own take in just a few minutes. Do it your way

A good starting point is our analysis highlighting 1 key reward investors are optimistic about regarding Coherent.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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