Rosenblatt Downgrades Coherent (COHR) to Neutral Amid Run-Up

Rosenblatt analyst Mike Genovese downgraded Coherent (NASDAQ: COHR) from Buy to Neutral with a price target of $55.00.

The analyst commented, “COHR is up ~80% in the past month on the thesis AI will drive massive growth in 800G and above Datacom Optical modules, leading to a shorter than expected inventory correction and better FY24 numbers. We understand investors are looking for AI beneficiaries, and we don't like to get in the way of a good secular story, but believe the bull thesis and stock are ahead of themselves. AI Pods are currently predominately closed with most equipment, including networking, supplied by major chip makers such as Nvidia (NVDA, Buy rated by H. Mosesmann) and Marvel (MRVL, Buy rated by H. Mosesmann).

We believe COHR will benefit from AI when the pods open and Ethernet is more widely deployed starting in 2HCY24. However, in the near-term, we are concerned about further shoes to drop in Networking, primarily due to high Telecom inventories, and Lasers, due to macro and competition. We liked buying COHR when it was trading at under 10x forward EPS. We are much more cautious now with the stock at ~15x consensus FY25 EPS. Our FY24 and FY25 estimates are below consensus, and the highest multiple we can get comfortable with for COHR now is ~16x. We are raising our price target to $55, based on 16x our FY25 EPS forecast of $3.44, and downgrading the stock to Neutral.”

For an analyst ratings summary and ratings history on Coherent click here. For more ratings news on Coherent click here.

Shares of Coherent closed at $42.59 yesterday.

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