Rosenblatt upgrades Coherent on AI transceiver mkt, new target implies 60% upside

Investing.com -- Rosenblatt Securities upgraded Coherent (NYSE: COHR) to Buy from Neutral, citing expected acceleration in AI transceiver demand, strong positioning in optical networking, and confidence in new leadership.

The brokerage raised its price target to $85 from previous levels, implying a roughly 60% upside from the current share price.

Rosenblatt highlighted the upcoming rollout of Nvidia’s Blackwell platform as a key growth driver, forecasting a sequential pickup in AI transceiver demand by the second half of 2025.

The firm also sees strong demand for coherent and ZR transceivers in data center interconnect (DCI) and telecommunications applications, supporting long-term growth in the optical networking space through 2030.

Concerns over co-packaged optics (CPO) replacing traditional transceivers appear overblown, Rosenblatt noted, pointing instead to new opportunities in emerging technologies such as ultra-high-power (UHP) lasers and optical circuit switches (OCS).

The brokerage also cited Coherent’s progress in commercializing 200G vertical-cavity surface-emitting lasers (VCSELs) and 100G and 200G electro-absorption modulated lasers (EMLs) as additional reasons for optimism.

The firm also pointed to Coherent’s new CEO, Jim Anderson, as a positive factor, alongside the company’s upcoming Analyst and Investor Day at the New York Stock Exchange on May 28.

The stock is currently trading at less than 13 times forward earnings, a level Rosenblatt sees as undervaluing its AI optics potential.

While acknowledging potential tariff risks, including a 24% levy on Malaysian goods, Rosenblatt is maintaining its estimates, citing strong demand signals from companies at the Optical Fiber Conference (OFC). The firm reiterated its belief that Coherent is a long-term leader in AI optics.

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