Coherent Corp. experienced robust gains in its stock on Tuesday, thanks to stronger-than-expected earnings, rapid growth in another unit, and a bullish report on a new product. During regular trading, Coherent’s stock (COHR) surged by 11.9%. In 2024, the stock has already risen by an impressive 27.7%, outperforming the Nasdaq COMP, which saw a mere 3.8% increase.
Continued Quarter of Strong Orders for Datacom Transceivers
Based in Santa Clara, California, Coherent is an optical communications and subsystems company. The company announced that its latest quarter marks the third consecutive quarter of strong orders for its datacom transceivers. Coherent expressed enthusiasm for the positive feedback received from major customers regarding its 1.6T transceivers.
Beat Expectations and Favorable Financial Performance
Coherent’s adjusted profit came in at 36 cents per share, surpassing the FactSet consensus estimate of 22 cents per share. The company attributed its success to factors like strong gross margin upside, favorable operating leverage, and interest and dividend income. Additionally, Coherent reported second-quarter revenue of $1.13 billion, exceeding both its own estimate range of $1.075 billion to $1.175 billion and analyst predictions of $1.12 billion.
Future Outlook and Optimism
Looking ahead, Coherent projects an adjusted third-quarter profit ranging from 32 cents to 52 cents per share, slightly lower than the FactSet consensus estimate of 38 cents per share. Furthermore, the company expects third-quarter revenue to range between $1.12 billion and $1.2 billion, compared to analyst estimates of $1.17 billion.
Positive Developments in the Silicon Carbide Business
Coherent expressed its interest in a new venture focused on silicon carbide, in collaboration with Mitsubishi Electric and Denso. The venture is valued at approximately $3 billion. On December 4, Coherent successfully completed the separation of its silicon carbide business, securing a 75% ownership stake in a new subsidiary, which is now valued at $4 billion. Mitsubishi Electric and Denso made a $1 billion investment in the project.
Overall, Coherent’s exceptional performance, growth in key areas, and positive outlook for the future have contributed to the significant increase in stock value, further establishing the company as a leader in the optical communications and subsystems industry.