Despite Coherent Corp reporting higher-than-expected Q4 results and strong guidance, its shares declined. An analyst reiterated a Buy rating and raised the price target, citing accelerating data center growth driven by AI demand, but noted investor disappointment regarding gross margin ramp.
Coherent Corp reported a fiscal fourth-quarter beat on both revenue and non-GAAP earnings, with significant acceleration in Data Center segment sales driven by AI hyperscale and cloud customers. An analyst from Needham reiterated a Buy rating and increased the price target from $380 to $420, highlighting the company's position as a major AI infrastructure beneficiary. However, despite the strong results and positive analyst outlook, COHR shares declined in early trading, likely due to investor disappointment over the gross margin ramp, which the analyst believes is dampened by weaker transceiver GMs. This presents a short-term negative sentiment for the stock, but the long-term implications remain positive given the strong demand for AI infrastructure and the company's increasing 6-inch InP wafer fab output.