What Does Coherent’s 28% Surge Mean for Investors in 2025?

If you have been watching Coherent stock lately, you are not alone. With its price popping up 6.2% in just the past week and nearly 28.4% over the last month, it is no wonder investors are starting to ask if this momentum can last, or if caution is the better play. The company has clearly entered the spotlight after a remarkable three-year run that delivered a 208.3% return, showing that there is some real horsepower behind the ticker. Even the five-year view, up 150.1%, is impressive for anyone thinking long term.

Some of this growth traces to recent market excitement around advanced electronics and photonics, areas where Coherent has carved out leadership. As demand for semiconductor and laser solutions ticks higher due to innovation and supply chain shifts, investors seem to be reappraising the risks and potential rewards of holding Coherent for the next big cycle.

However, before getting caught up in the buzz, it helps to look at things from a clear valuation perspective. Coherent’s value score currently sits at 2 out of 6, meaning it looks undervalued on just two out of the six checks typical for judging a company’s worth. That is a hint that, while there is growth in the story, the stock’s price might not be the screaming deal some hope for, at least not on every metric.

Let’s dig into those different valuation methods and see where Coherent stands, and perhaps even more importantly, explore a smarter way to gauge value that often gets overlooked.

Coherent scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Coherent Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model is a valuation method that estimates a company's intrinsic value by projecting its future cash flows and discounting them to today's dollars. This approach helps investors understand how much a business is worth now based on what it is expected to generate in the years to come.

For Coherent, the DCF is built using a two-stage Free Cash Flow to Equity model. The company’s most recent trailing twelve-month Free Cash Flow (FCF) stands at $180.1 Million. Analysts expect this figure to climb. Projections for 2026 and 2027 put FCF at $298.7 Million and $658.5 Million, respectively. By 2028, the figure is forecasted to reach $797 Million. Further out, extended projections extrapolate FCF to around $1.3 Billion by 2035, though these distant estimates should be viewed with caution due to increased uncertainty.

Based on this cash flow trajectory and the DCF analysis, Coherent’s fair value is estimated at $102 per share. However, with the current share price trading around 11.4% above this intrinsic value, the stock appears overvalued according to this metric.

Result: OVERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Coherent.

Our Discounted Cash Flow (DCF) analysis suggests Coherent may be overvalued by 11.4%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Coherent Price vs Sales

Price-to-Sales (P/S) is a practical valuation metric, especially for companies like Coherent that may not yet be consistently profitable but are demonstrating strong top-line growth. Since earnings can be volatile or negative during investment cycles, P/S offers investors a way to assess value based on revenue generation, which is often more stable for rapidly evolving tech companies.

Growth expectations and perceived risks play a major role in what counts as a “normal” or “fair” P/S ratio. Fast-growing, innovative companies typically justify higher multiples, whereas more mature or risk-prone businesses demand lower ratios. For Coherent, the current P/S ratio stands at 3.05x. This is slightly above the broader Electronic industry average of 2.48x, but below the peer group average of 4.40x. This suggests the market sees the company as somewhat more valuable than the typical industry name, but not at the very top tier of its peer set.

To add more context, Simply Wall St calculates a proprietary “Fair Ratio” which considers not just industry benchmarks but also Coherent’s growth outlook, profit margins, market capitalization and risk profile. Unlike a straightforward peer or industry comparison, the Fair Ratio adapts to the company’s specific fundamentals. For Coherent, the Fair Ratio is 3.09x, which is remarkably close to the company’s current P/S of 3.05x, indicating the stock is trading almost exactly in line with what is justified by its fundamentals.

Result: ABOUT RIGHT

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Coherent Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is your personalized story about a company, where you connect what you believe about its future, from revenue and margin assumptions to business strengths and risks, with a specific financial forecast and your own fair value estimate.

Narratives bridge the gap between Coherent’s real-world story and the numbers by making it easy to capture your investment thesis and instantly see how it translates into fair value. This brings transparency to every “buy” or “sell” decision. On Simply Wall St’s Community page, millions of investors share and update their Narratives, using dynamic tools that recalculate fair value when fresh news or earnings data arrives.

This means you do not have to rely only on analyst reports; instead, you can see a range of perspectives. For example, one investor might see robust AI datacenter demand and new Texas manufacturing as reasons to set a bullish fair value above $135, while another, focused on tough competition or margin risk, lands closer to $85. Narratives make the numbers make sense for you, and evolve as the story does.

Do you think there's more to the story for Coherent? Create your own Narrative to let the Community know!

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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