Coherent Gains 12% in After Hours Following Q3 Earnings Beat

"Coherent delivered its fourth consecutive earnings beat, posting $0.74 in adjusted EPS against expectations of $0.61. The beat marks a 21.3% surprise and continues a remarkable turnaround from last year's losses. The stock has climbed steadily through 2025 as the company executes on margin expansion and capitalizes on AI datacenter demand, though it pulled back slightly after hours following the report as investors digested forward guidance."

"The real driver of Coherent's rebound is datacom revenue, which surged 89% year-over-year in the quarter. The company's 800-gigabit transceivers are ramping broadly across customers, and management signaled confidence in launching 1.6-terabit products in calendar 2025. This AI datacenter tailwind has transformed Coherent's revenue profile. Total quarterly revenue grew 28% year-over-year, with datacom accounting for the bulk of that acceleration. The company is now operating at scale in the highest-growth segment of the optical networking market."

"Coherent swung to $49.4 million in net income in fiscal 2025 after posting a $156 million loss the prior year. That turnaround is substantial and reflects both revenue growth and disciplined cost management. However, management's forward commentary struck a measured tone. They acknowledged the strength in AI-driven demand but stopped short of aggressive expansion plans, suggesting they're watching demand trends closely as the market matures."

Coherent posted adjusted EPS of $0.74 versus $0.61 expected, marking a 21.3% beat and continuing a turnaround from prior losses. Total quarterly revenue grew 28% year-over-year, led by datacom revenue, which surged 89% as 800-gigabit transceivers ramp broadly and 1.6-terabit products target calendar 2025. Gross margins expanded to 35.2% from 30.9% a year earlier, with a management target to sustain margins above 40% through pricing and cost reductions. Net income swung to $49.4 million from a $156 million loss. Management emphasized measured, execution-focused guidance while monitoring demand trends, and the stock rose through 2025 but retraced slightly after the report.

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