Investors shouldn’t shy away from Coherent despite a lower 2024 forecast, according to Rosenblatt Securities. The firm upgraded Coherent to buy from neutral on Wednesday. It also issued a target price to $45 per share, implying more than 36% upside from Wednesday’s close. Shares sold off Wednesday after the company issued disappointing fiscal year earnings guidance, dropping nearly 30%. However, analyst Mike Genovese said the projections are in all likelihood exceedingly conservative and noted a “huge” AI opportunity for the company. “The FY24 revenue guidance of ~$4.6bn is down 11% y/y. There is weakness in Telecom, legacy Datacom, and most industrial end-markets the Lasers (Coherent classic) and Materials segments play in,” Genovese said, “The good news is Coherent received very large 800G Datacom for AI orders in 4Q23 that drove Networking orders up 80% q.q [quarter-over-quarter].” Meanwhile, Genovese says Coherent could be the largest beneficiary of the growth of 800G optical transceivers, which streamline data transmission and gives the company ample exposure to AI. “COHR is the #1 beneficiary of 800G Optical demand for AI, in our opinion,” he said. Coherent stock has slipped 2% this year. COHR YTD mountain Coherent is down 2% this year — CNBC’s Michael Bloom contributed to this report.
