BofA said that Coherent is battling with slower momentum in its data center operations and weaker-than-expected profit margins.
Bank of America has revised its outlook on Coherent Corp. (COHR), downgrading its rating from ‘Buy’ to ‘Neutral’, while simultaneously increasing the stock’s price target to $105, from the previous target of $92.
The firm said that Coherent is battling with slower momentum in its data center operations and weaker-than-expected profit margins, as per TheFly. While the company has taken several restructuring steps, the expected improvements haven’t been realized quickly enough.
The company’s fourth-quarter (Q4) revenue and adjusted earnings per share (EPS) of $1.53 billion and $1, both beat the analysts’ consensus estimate of $1.51 billion and $0.92, respectively, as per Fiscal AI data. However, Q1 revenue guidance of $1.46 billion to $1.6 billion, at a midpoint of $1.53 billion, fell short of consensus estimate of $1.54 billion.
Coherent stock tumbled over 19% in Thursday’s premarket. On Stocktwits, retail sentiment around the stock improved to ‘extremely bullish’ from ‘bullish’ territory the previous day. Message volume shifted to ‘extremely high’ from ‘high’ levels in 24 hours.
The stock experienced a 3,575% surge in user message count over 24 hours. A bullish Stocktwits user said they are holding the stock and expect it to recover quickly.
Another user called the stock price reaction ‘incorrect’.
BofA also highlighted that Coherent’s recent sale of its aerospace and defense division will likely create a revenue gap of around $170 million in fiscal 2026. Although a new partnership with Apple Inc. (AAPL) offers promise, those revenues are not expected to impact the bottom line until fiscal 2027.
On Wednesday, the company entered into a definitive agreement to sell its Aerospace and Defense business to Advent, a global private equity investor, for $400 million. The proceeds from the sale will be used for debt repayment, which is expected to have an immediate positive impact on Coherent’s earnings per share.
Despite these concerns, the research firm slightly increased its financial projections for the company for both 2026 and 2027 to 5% and 12% respectively. BofA cited reduced interest expenses as the primary reason for the improved estimates.
Coherent stock has gained over 20% in 2025 and over 70% in the last 12 months.
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