Coherent Corp. (COHR): A Bull Case Theory 

We came across a bullish thesis on Coherent Corp. on Mispriced Assets’s Substack by Nick Nemeth. In this article, we will summarize the bulls’ thesis on COHR. Coherent Corp.’s share was trading at $164.26 as of November 28th. COHR’s trailing P/E was 231.35 according to Yahoo Finance.

Coherent Corp. develops, manufactures, and markets engineered materials, optoelectronic components and devices, and laser systems for the use in the industrial, communications, electronics, and instrumentation markets worldwide. COHR has entered a decisive growth phase that the market has yet to fully appreciate, marking a clear acceleration in execution.

The company has now achieved ten consecutive double-beats over more than two years, demonstrating consistent outperformance and operational strength. Gross margins are approaching 40%, reaching targets two quarters ahead of schedule, while operating margins are nearing 20%, signaling that leverage is beginning to meaningfully amplify profitability.

Demand visibility has expanded significantly, with constrained supply in critical optical and laser segments providing long-term clarity and reducing execution risk. Importantly, the industrial-laser segment, which has historically weighed on performance, is expected to turn positive in the next quarter, removing a longstanding drag on earnings.

Coherent’s leadership in networking optics, often underestimated by skeptics who draw parallels to the memory market, positions it uniquely among peers; competitors like Lumentum (LITE) and Broadcom (AVGO) do not offer the same growth-at-a-reasonable-price (GARP) profile or upside potential.

The combination of strong demand, margin expansion, and operational leverage makes COHR an exceptional growth story with both visibility and scalability. Analysts have responded by raising the 12-month price target from $200 to $225, while the three-year potential target sits at $500, reflecting the market’s underappreciation of the company’s accelerating trajectory. With a clear path to expanding margins, turning previously underperforming segments positive, and leveraging constrained supply to its advantage, Coherent presents a compelling investment case for those seeking durable growth in optical and laser technologies, with both near-term upside and long-term transformative potential.

Previously we covered a bullish thesis on Wolfspeed, Inc. (WOLF) by Moist-Clerk in October 2024, highlighting its transition to a silicon carbide (SiC) and gallium nitride (GaN) leader, expanding production capacity, and EV/5G-driven revenue growth. The stock has appreciated approximately 25.10% since coverage. The thesis still stands as Wolfspeed scales production. Nick Nemeth shares a similar but emphasizes Coherent’s growth acceleration, margin expansion, and long-term demand visibility.

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Disclosure: None.