Monday, Needham raised its price target for Coherent shares (NASDAQ:NYSE:COHR) to $72 from $64, while maintaining a Buy rating. The adjustment reflects the firm's expectation of continued healthy growth in Coherent's artificial intelligence (AI)-related transceiver business, which is anticipated to help mitigate the broader macroeconomic challenges affecting the company's Industrial and Electronics segments throughout fiscal year 2024.
Coherent's optimistic stance was recently echoed during last week's Optical Fiber Communication Conference (OFC), where the company confirmed a strong outlook for its 800G AI transceiver business.
This segment is forecasted to see a 200% sequential increase in the second half of the fiscal year. The robust performance in the AI sector is expected to compensate for other areas of Coherent's business that are currently facing macroeconomic headwinds.
Needham's outlook for Coherent extends into fiscal year 2025, with the firm anticipating that the ongoing strength in AI datacom demand will be complemented by a recovery in key sectors of Coherent's Industrial business. This includes areas like OLED display technology and semiconductors, which are projected to experience an upturn.
The firm's reiterated Buy rating on Coherent underscores a positive view on the company's future performance, driven by its AI transceiver business's momentum and prospective improvements in the Industrial sector. This sentiment is based on the company's current business trajectory and expected market developments.
InvestingPro Insights
As Coherent (NASDAQ:COHR) navigates through its fiscal year, real-time data from InvestingPro provides a deeper look into the company's financial health and market performance. With a market capitalization of $6.12 billion and a high P/E ratio of 56.98, reflecting investor confidence in its future earnings potential, Coherent is positioned as a significant player in its industry. The company's revenue growth over the last twelve months stands at 4.52%, indicating a steady increase despite the broader market challenges.
InvestingPro Tips highlight that analysts are revising their earnings upwards for the upcoming period, which aligns with Needham's positive price target revision. Additionally, Coherent's stock price has shown remarkable volatility, with a significant price uptick of 85.72% over the last six months. This volatility and performance suggest that investors may expect dynamic trading opportunities ahead. For readers looking to delve further into Coherent's financials and market predictions, InvestingPro offers more tips and data. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription and uncover the 11 additional InvestingPro Tips that could guide your investment decisions.
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