Loop Capital has increased its price target for Coherent shares (NYSE: NYSE:COHR) to $95.00, up from the previous $70.00, while reaffirming a Buy rating for the company. The adjustment follows Coherent's earnings per share (EPS) report for the June quarter, which was released last Monday.
The financial firm expressed confidence in Coherent's growth trajectory, indicating a potential EPS of $5.00 to $6.00 by calendar year 2026. Loop Capital's optimism is rooted in the strategic direction provided by Coherent's new CEO, Jim Anderson, who is credited with having a clear and sophisticated plan for the company's future.
The analyst's outlook suggests that Coherent is expected to establish a minimum operating margin (OM) of 20% on a gross margin (GM) of 40%, with a possibility of further improvement. The revised price target of $95 is based on 17 times the anticipated normalized EPS range of $5.00 to $6.00 that Coherent is projected to achieve over the next eight quarters.
Loop Capital's analysis underscores the belief that Coherent's revenue growth, coupled with effective implementation and execution of its strategies under CEO Anderson's leadership, will support the company's financial performance in the coming years.
In other recent news, Coherent's fourth-quarter results exceeded expectations with a 9.1% year-over-year increase in revenue to $1.31 billion, surpassing the predicted $1.28 billion. Adjusted earnings per share stood at $0.61, slightly above the consensus forecast of $0.60.
Craig-Hallum, Benchmark, Rosenblatt Securities, Morgan Stanley (NYSE:MS), and Citi have all raised their price targets for Coherent. This is based on the company's strong performance in the Datacom sector, particularly due to sales of AI transceivers, and the strategic approach of CEO Jim Anderson to enhance profitability and focus on high-growth segments.
Coherent is also making strategic moves to divest non-core and underperforming businesses, aiming to reduce debt and improve its balance sheet. These are among the recent developments shaping Coherent's trajectory. The company anticipates revenue for the first quarter of fiscal 2025 to fall between $1.27 billion and $1.35 billion, with adjusted EPS projected to range from $0.53 to $0.69.
InvestingPro Insights
As Coherent, Inc. (NYSE:COHR) continues to attract attention following its recent earnings report, InvestingPro data provides additional context for investors considering the company's prospects. With a market capitalization of $11.87 billion and a high price-to-earnings (P/E) ratio of 56.98, Coherent's valuation reflects investor optimism about its future earnings potential. Despite a decline in revenue growth over the last twelve months by 8.77%, the company has experienced a significant return over the last week, with a 15.68% increase in its stock price.
InvestingPro Tips suggest that, while analysts have revised their earnings downwards for the upcoming period, there is an expectation for net income growth this year. This aligns with Loop Capital's positive outlook on Coherent's future performance. Moreover, Coherent's liquid assets surpass its short-term obligations, providing a cushion for operational flexibility. However, it's worth noting that the stock is trading near its 52-week high, which might indicate a need for caution among prospective buyers.
For investors seeking a comprehensive analysis, there are additional InvestingPro Tips available that delve deeper into Coherent's financial health and market performance. These insights could be instrumental for those looking to make informed decisions based on the latest data and expert projections.
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