QS Research · Michael Burry's Scion Capital analyst template · 2006
COHERENT CORP. (COHR)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case 0% · downside -34% · upside +25%
The market is not missing the AI-optics story; it is already paying 32.2x TTM EBITDA and 39.7x TTM P/E for it, while TTM operating cash flow is -$59.1M and FCF is -$1.83B. Using section 13's TTM base, 32.2x x $1.26B EBITDA = $40.46B EV; less $2.59B net debt = $38.19B equity / 196.96M shares = about $193.92, or 0% vs today. Downside at 22.0x = $27.7B EV - $2.59B = $25.1B / 196.96M = about $128 (-34%); upside at 40x = $50.4B EV - $2.59B = $47.8B / 196.96M = about $243 (+25%). Section 13's TTM base is the right one because forward guidance is non-GAAP and unreconciled; that makes this a watchlist name, not a long, since the rule needs base >= +30% and downside no worse than -25%.
Key numbers
- Share price: $193.92
- Market cap: $38.19B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $7.91B
- EV / EBITDA (TTM): 32.2x
- P/E (TTM): 39.7x
- Price / book: 3.37x
The 15 boxes
- ✓ 1. Long-form business notes
Coherent is a vertically integrated maker of lasers, transceivers, other optical/optoelectronic devices, modules and systems plus engineered materials, sold into datacenter & communications and industrial end markets. Between the two filings compared here the company changed identity and roughly doubled in size: the FY2021 10-K is II-VI Incorporated, pre-Coherent-merger, with $3.11B FY2021 revenue; the FY2026 10-K is Coherent Corp. with $7.12B of revenue for FY2026 and 51,478 employees. FY2026 shows positive pre-tax and net income ($847.7M and $769.9M) off three prior years of net losses, but operating cash flow collapsed to $79.5M against $1.10B of capex, and the dataset carries no operating income for FY2025/FY2026 and no TTM or guidance figures to test the quality of that swing.
- ✓ 2. Competitive advantage
Coherent claims a genuine moat — vertical integration from engineered materials to finished transceivers, roughly 3,160 issued patents, and 6-inch InP fabs in the US and Europe plus multiple 6-inch GaAs VCSEL fabs — and it has scale ($7.12B FY2026 revenue vs $3.11B FY2021) and an anchor NVIDIA multi-year supply agreement. But the P&L does not prove pricing power: operating income was $402.1M in FY2021, $414.3M in FY2022, -$37.1M in FY2023 and only $96.1M in FY2024 on $4.71B of revenue, and the DATA set gives no operating income at all for FY2025 or FY2026. Two customers each contributed more than 10% of FY2026 revenue and the filing concedes substitute technologies exist, both of which weaken switching-cost claims. FY2026 net income of $769.9M is a net figure; with operating income undisclosed it cannot be used to call the business durably profitable at the operating line.
- ✓ 3. 10-Q takeaways
The latest 10-Q for the three months ended 2026-09-30 shows revenue up 50% to $2,370M, led by Datacenter & Communications revenue up 79% to $1,952M, while Industrial fell 15% to $419M on divestitures. Gross margin rose 254 bps to 39%, and pre-tax earnings were $359M; net earnings of $382M ($1.90 diluted EPS) included a $23M income tax benefit, while the prior-year quarter included a $115M divestiture gain. Net cash used in operating activities was $93M on a significant inventory build, and capex rose to $776M; cash remains large but total debt increased to $4,001M. The 10-Q gives demand and capacity-investment commentary, including NVIDIA's $2B investment and a multi-year capacity agreement, but no formal revenue/EPS guidance or buyback disclosure.
- ✓ 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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