Coherent stock rallies on profit beat and bullish comments on product launch

By Steve Gelsi

Stock jumps to end with a gain of 17.4% on boost in net income and 'favorable operating leverage'

Stronger-than-expected earnings, fast growth in another unit and a bullish report on a new product powered gains in Coherent Corp.'s stock on Tuesday.

Coherent (COHR) stock rose 17.4% by the closing bell on Tuesday. The stock has risen 33% so far in 2024, compared to a 4% rise by the Nasdaq COMP.

The Santa Clara, Calif.-based optical communications and subsystems company said its latest quarter marked the third straight quarter of strong orders for its datacom transceivers.

The company said it was "excited by the active engagement" it has received on its 1.6T transceivers from large customers.

Adjusted profit of 36 cents a share beat the FactSet consensus estimate of 22 cents a share.

Coherent benefitted from "strong gross margin upside, favorable operating leverage, and interest and dividend income," the company said.

It said its second-quarter revenue of $1.13 billion was above the midpoint of its estimate of $1.075 billion to $1.175 billion. The figure also beat analyst estimates of $1.12 billion.

Looking ahead, Coherent is forecasting adjusted third-quarter profit of 32 cents to 52 cents, compared to the FactSet consensus estimate of 38 cents a share.

Coherent expects third-quarter revenue of $1.12 billion to $1.2 billion, compared to analyst estimates of $1.17 billion.

The company said its third-quarter net loss narrowed to $27 million, or 38 cents a share, from a year-ago loss of $45 million, or 58 cents a share, in the year-ago quarter.

Revenue at its 800G line increased by more than 100% from the previous quarter, said Stifel analyst Ruben Roy, who reiterated a buy rating on the company.

Coherent said its interest in a new silicon carbide business venture with Mitsubishi Electric and Denso is valued at about $3 billion.

On Dec. 4, Coherent completed the separation of its silicon carbide business for a 75% ownership stake in a new subsidiary at a $4 billion valuation, with a $1 billion investment from Mitsubishi Electric and Denso.

-Steve Gelsi

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02-06-24 1622ET

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