Coherent Corp: F2Q26 Review — Accelerating Growth from Portfolio-Wide Demand Strength and Capacity Ramp; Higher EPS Power Est. Despite Conservatism; Raise PT to $245
Summaries are public. PDF access requires an active membership; all members have the same access. Sign in
Coherent Corp delivered a strong financial performance in the second quarter of fiscal year 2026, with revenue reaching $1.686 billion. This figure surpassed both J.P. Morgan's estimate of $1.630 billion and the market consensus of $1.641 billion, representing a robust 22% year-over-year growth on a pro forma basis. The outperformance was primarily driven by surging demand across data center and communication networks.
The company highlighted several significant operational milestones, including a major new contract for co-packaged optics solutions, sustained strength in 800G and 1.6T transceiver demand, and the expansion of its optical circuit switching systems to over ten clients. Management expressed confidence in continued sequential growth through fiscal 2026 and 2027, with growth expected to accelerate further in the latter year.
To support this robust demand pipeline, Coherent is rapidly expanding its production capacity. This includes scaling indium phosphide wafer capabilities, achieving 80% of internal initiation targets, and leveraging new facilities in Malaysia and Vietnam. The data center product book-to-bill ratio now exceeds 4 times.
Based on this operational momentum, J.P. Morgan revised its fiscal 2026 revenue growth estimate to the high teens and fiscal 2027 to over 20%. Gross margins are projected to exceed 40% in the second half of 2026. Consequently, the firm raised its December 2026 target price from $215 to $245, based on 30 times calendar year 2027 EPS estimates, while maintaining an Overweight rating.