QS Research · Michael Burry's Scion Capital analyst template · 2006
COHERENT CORP. (COHR)
As of 2026-11-08 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case none · downside -21% · upside +32%
The market is not missing the AI-optics growth; it is already paying 32.0x TTM EV/EBITDA and 39.5x P/E after a 56.2% drawdown, while TTM free cash flow is -$1.83B. On the company's own 32.0x multiple, TTM EBITDA of $1.26B supports roughly $193 per share: $1.26B x 32.0 = $40.3B EV, less $2.27B net debt = $38.0B equity, divided by 196.96M shares = $193, or about 0% versus $192.81. A 20% EBITDA decline at the same multiple gives about $152 (-21%), and a 30% increase gives about $255 (+32%). That is not a deep-value long because cash conversion is negative and the share count is up 30.0% in three years, but it is also not a clean short under the rule because the base case is not -30%. Watch for Q2 FY2027 guidance delivery and any turn in operating cash flow.
Key numbers
- Share price: $192.81
- Market cap: $37.98B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $7.91B
- EV / EBITDA (TTM): 32.0x
- P/E (TTM): 39.5x
- Price / book: 3.35x
The 15 boxes
- ✓ 1. Long-form business notes
Coherent is a vertically integrated optical/optoelectronic and engineered-materials manufacturer selling into datacenter & communications and industrial markets. The FY2026 10-K shows a two-segment structure after the July 1, 2025 realignment, about 51,000 employees, and FY2026 revenue of $7.12B, up from $3.11B in FY2021 per XBRL. FY2026 operating cash flow was $79.5M against $1.10B capex, while net income to common was $769.9M after negative years; XBRL leaves FY2025/FY2026 operating income shown as —. The oldest FY2021 filing is II-VI, with a pending Coherent acquisition and three prior segments.
- ✓ 2. Competitive advantage
Coherent claims a durable advantage built on vertical integration from materials to systems, in-house components, 6-inch InP/GaAs fabs and an IP portfolio, and it is a self-described leading supplier of optical transceivers for AI datacenters. But the record behind that claim is thin: operating income was $402.1M on $3.11B revenue in FY2021 and just $96.1M on $4.71B in FY2024, net income to common was negative in each of FY2023-FY2025, and FY2026 pre-tax income of $847.7M comes with operating income untagged in the data. Two customers each exceeded 10% of fiscal 2026 revenue and customers have taken price concessions, which points to limited pricing power rather than a toll-booth. The sources name no competitor, and capex of $1.10B against operating cash flow of $79.5M in FY2026 shows the advantage is being bought, not harvested.
- ✓ 3. 10-Q takeaways
Q1 FY2027 (quarter ended Sep 30, 2026) revenue rose 50% y/y to $2,370M, with Datacenter & Communications +79% to $1,952M and Industrial -15% to $419M on divestitures. GAAP gross margin was 39.1% (+254 bps y/y) and non-GAAP gross margin 40.6%; GAAP net earnings attributable were $385M / $1.90, with no sale gain or held-for-sale impairment in the current quarter. Operating cash flow was -$93M as inventory rose to support growth; cash was $1,553M and total debt $4,001M at Sep 30, 2026. Q2 FY2027 guidance is $2.55-$2.75B revenue and $2.28-$2.48 non-GAAP EPS.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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