Overview
Needham has reaffirmed a Buy rating on Coherent (NYSE:COHR) and held its price target at $235.00 following the company’s fiscal second-quarter results. The firm’s target equates to an 11% upside from the then-current price of $211, even as InvestingPro data indicates the stock is trading above its Fair Value and analyst targets span a wide range from $125 to $325.
Quarterly performance and guidance
Coherent posted quarterly results that outpaced consensus estimates, beating revenue expectations by 3% and topping earnings per share projections by $0.08. For the fiscal third quarter, the company provided guidance that also exceeded analyst forecasts - with revenue guidance ahead by 2% and earnings per share guidance higher by $0.06 relative to analyst expectations.
Needham highlighted these outcomes as part of a pattern of strengthening execution at Coherent, noting capacity additions at fabrication sites designed to supply growing demand tied to artificial intelligence and cloud capital expenditures. That operational emphasis aligns with the firm’s view that Coherent’s execution appears to be improving steadily.
Segment dynamics
The fiscal second-quarter results were anchored by a strong showing from the Data Center & Communications segment, which expanded 34% year-over-year and 11% sequentially. Management said there was a meaningful increase in both internal and external laser supply during the quarter - a factor cited in Needham’s positive take on the company’s near-term prospects.
Coherent’s fiscal third-quarter revenue guidance calls for 4.6% quarter-over-quarter growth, which the company attributes to sustained cloud demand and continued availability of input supply in the Data Center & Communications segment. Based on these trends, Needham now anticipates topline acceleration in the fiscal fourth quarter.
Reported results for the quarter
In related company disclosures, Coherent reported second-quarter financial results for 2026 that exceeded analyst expectations. The company recorded earnings per share of $1.29 versus a forecast of $1.21, and revenue of $1.69 billion compared with an anticipated $1.64 billion. These figures underscore the quarter’s strength, even as the stock itself has shown volatility in trading.
Market performance and valuation context
InvestingPro data referenced by analysts shows the stock has delivered a 134% return over the past year and nearly a 100% gain in the last six months. That strong price performance sits alongside commentary that the shares may be trading above their Fair Value and a broad spread of analyst price targets ranging from $125 to $325, which signals divergent views on valuation among market participants.
Conclusion
Needham’s reiteration of a Buy rating and its $235 target reflect confidence in Coherent’s recent execution, capacity expansion efforts and continued demand from AI and cloud-related customers. The company’s beat of near-term estimates and raised guidance for the fiscal third quarter are central to that assessment, while valuation dynamics and recent volatility remain part of the market picture.
Key points
- Needham reaffirmed a Buy rating and kept a $235 price target, implying an 11% upside from a $211 share price.
- Coherent beat fiscal Q2 revenue and EPS expectations and issued fiscal Q3 guidance above analyst forecasts; Data Center & Communications grew 34% year-over-year and 11% quarter-over-quarter.
- InvestingPro data shows strong recent stock returns (134% over one year, nearly 100% in six months) but indicates the shares may be trading above Fair Value; analyst targets range from $125 to $325.
Risks and uncertainties
- Valuation risk: InvestingPro data suggests the stock is trading above Fair Value, and analyst price targets span widely from $125 to $325, indicating disagreement on appropriate valuation - relevant to equity investors and market participants.
- Market volatility: The company’s shares have experienced volatility despite strong quarter-to-quarter performance, which could affect investor sentiment and trading activity in the short term.
- Demand and execution dependence: Continued revenue growth and guidance are tied to ongoing cloud and AI capital expenditure demand and the company’s ability to scale fabrication capacity and laser supply - impacting suppliers and the semiconductor/optical components sectors.