Coherent Q2 Earnings Preview: Buy Now or Wait for the Results?

Coherent Corp. COHR is set to report second-quarter fiscal 2026 results on Feb. 4, after market close.The Zacks Consensus Estimate for earnings is pegged at $1.22 per share, suggesting 28.4% growth from the year-ago quarter’s reported level. The consensus estimate for revenues is $1.6 billion, implying 13.9% year-over-year growth.Over the past 60 days, two EPS for the second quarter of fiscal 2026 have been revised upward, with one downward revision. During this period, the Zacks Consensus Estimate moved up 1.7% to $1.22. These upward revisions demonstrate analysts' increased confidence. Image Source: Zacks Investment Research Coherent’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, delivering an average surprise of 0.7%.Coherent Corp. Price and EPS Surprise  Coherent Corp. price-eps-surprise | Coherent Corp. QuoteHigher Chance of Q2 Earnings Beat for COHROur model predicts an earnings beat for Coherent this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks before they are reported with our Earnings ESP Filter.COHR currently has an Earnings ESP of +1.03% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.Product Portfolio to be COHR’s Q2 Growth DriverCoherent witnessed a significantly high demand for products due to direct bookings, which we expect to have continued in the second quarter of fiscal 2026. The swift acceptance of 1.6T transceivers compels us to expect their demand to rise exponentially in 2026.During the last reported quarter’s earnings call, management disclosed that rising demand for AI datacenters led the company to ramp up its 6-inch Indium Phosphide (InP) production in Jarfalla, Sweden. Per Precedence Research, the global AI datacenter market is expected to see a CAGR of 27.5% through 2035. Banking on this growth, we expect COHR to have experienced heavy InP sales in the second quarter of fiscal 2026.On the Optical Circuit Switch (OCS) front, management identified a $2-billion market opportunity in the long run. With the growing demand for AI, we expect the company to capture a larger pie of the OCS market, which is certainly a growth driver in the second quarter of fiscal 2026.Coherent’s Stock Comparison With PeersCOHR shares have skyrocketed 142.5% over the past year, surpassing 7% growth of its industry and the 19.6% rise of the Zacks S&P 500 composite. The company has outpaced its industry peers, with Figure Technology Solutions FIGR surging 82.8% and Skillsoft SKIL plummeting 68.4%.1-Year Share Price Performance Image Source: Zacks Investment Research Over the past six months, COHR has soared 98.8%, beating the 3.9% rise of the industry and 13.1% growth of the Zacks S&P 500 composite. The stock has beaten its industry peer Figure Technology Solutions’ 82.9% surge and Skillsoft’s 37% fall.COHR is currently trading at a trailing 12-month price-to-earnings (P/E) ratio of 36.11X, higher than the industry’s 23.55X. The stock is trading at a discount with Figure Technology Solutions’ 57.25X, while being expensive in comparison with Skillsoft’s 2.17X.P/E - F12M Image Source: Zacks Investment Research Coherent’s Investment ConsiderationsCOHR is taking advantage of the AI boom, catering to the market through its diverse product portfolio. In fiscal 2025, the company managed to register a 51% year-over-year jump in the data center and communications market, with a 61% upsurge in the data center business alone. In the first quarter of fiscal 2026, COHR managed to remain consistent with its growth trajectory and witnessed a 17.3% hike year-over-year in its top line, with the data center business revenues rallying 23%.This growth was accompanied by a year-over-year expansion of 1,081 basis points in its operating margin, suggesting operational efficiency. This scalability is essential in the rapidly growing AI market. The company holds a strong balance sheet position, with $875 million in cash reserves as of September 2025, which is substantially higher than the current debt of $48 million. It creates a safety net for the company and provides flexibility in securing debt for investment.On the liquidity front, the current ratio of the company is at 2.33 compared with the industry average of 1.58, an indication of its strength in covering short-term obligations.Meanwhile, the company shoulders immense competitive pressure from Wolfspeed and ON Semiconductor in the Silicon Carbide (SiC) sector. Despite COHR’s massive presence within the SiC sector, it registered a 6% year-over-year dip in its end-market demand in its Material segment’s revenues in fiscal 2025. Moving ahead of the game will require Coherent to make sharp investments, which may affect its ability to maintain growth and profitability.Hold on to COHR for NowCoherent is a unique candidate within the AI infrastructure that warrants a “Hold” due to its premium valuation and industrial headwinds. Its shares have soared 142.5% in a year and 98.8% in the past six months, pushing the P/E ratio to 36.11X, which is substantially higher than the industry average of 23.55X. This compels us to reckon that the surging demand for its products and the massive market opportunity are already priced in.Moreover, fierce competition within the SiC sector is a massive setback that can hamper the growth and profitability balance. Hence, we recommend that investors remain cautious and assess Coherent’s ability to maintain its growth trajectory in the to-be-reported quarter. A wait-and-see approach is a must for investors to find a more attractive entry point.#1 Semiconductor Stock to Buy (Not NVDA)The incredible demand for data is fueling the market's next digital gold rush. As data centers continue to be built and constantly upgraded, the companies that provide the hardware for these behemoths will become the NVIDIAs of tomorrow.One under-the-radar chipmaker is uniquely positioned to take advantage of the next growth stage of this market. It specializes in semiconductor products that titans like NVIDIA don't build. It's just beginning to enter the spotlight, which is exactly where you want to be.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Coherent Corp. (COHR): Free Stock Analysis Report Skillsoft Corp. (SKIL): Free Stock Analysis Report Figure Technology Solutions, Inc. (FIGR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks