Coherent Corp. Hold Rating: Balancing Datacom Strength with Margin Challenges and Mixed Sector Outlooks

Susquehanna analyst Christopher Rolland has maintained their neutral stance on COHR stock, giving a Hold rating today.

Christopher Rolland has given his Hold rating due to a combination of factors impacting Coherent Corp. The company has shown strong performance in the Datacom sector, particularly with the ramp-up of 800G transceivers and the anticipation of 1.6T products by the end of 2025. However, the guidance for gross margins fell short of expectations due to unfavorable product mix, which poses a challenge to profitability.
Additionally, while there is optimism in certain areas like the expansion of indium phosphide production and the potential growth from serving NVIDIA’s CPO switches, there are concerns in other segments. The telecom sector has shown improvement, yet management remains cautious about the traditional telecom business. Furthermore, the industrial-related markets have a cautious near-term outlook, leading to a conservative guidance. These mixed signals contribute to the Hold rating, as the company navigates both opportunities and challenges in its strategic execution.

According to TipRanks, Rolland is a 5-star analyst with an average return of 13.8% and a 51.00% success rate. Rolland covers the Technology sector, focusing on stocks such as Nvidia, ON Semiconductor, and Knowles.

In another report released today, Morgan Stanley also maintained a Hold rating on the stock with a $70.00 price target.