Coherent Corp. COHR used its fiscal fourth-quarter 2026 earnings call to frame fiscal 2027 around a faster production ramp, AI optics demand and new revenue streams. CEO Jim Anderson said quarterly revenues are expected to exceed $3 billion by the end of fiscal 2027.
The outlook followed fourth-quarter revenues of $2.05 billion and non-GAAP earnings of $1.74 per share. Both metrics beat the Zacks Consensus Estimate of $1.99 billion and $1.62 per share, respectively.
COHR Raises the Fiscal 2027 Growth Bar
CEO Anderson said record bookings, rising component supply and new product ramps support faster growth in fiscal 2027. Datacenter & Communications represented 79% of fiscal fourth-quarter revenues.
CFO Sherri Luther guided fiscal first-quarter revenues to $2.2-$2.4 billion and non-GAAP earnings to $1.85-$2.05 per share. Non-GAAP gross margin is expected at 39.5-41.5%.
Anderson said 800-gig transceivers should keep growing year over year in calendar 2026, while the 1.6T ramp has accelerated beyond expectations from three months earlier.
Coherent Accelerates the 6-Inch InP Ramp
COHR’s CEO said indium phosphide output remains the main constraint on transceiver growth. Coherent expects to double internal output year over year by the end of the current quarter, one quarter ahead of plan.
Responding to a JPMorgan analyst, Anderson said June-quarter indium phosphide laser production rose about 80% year over year. He added that fiscal first-quarter data center growth is expected to exceed 80% year over year.
Anderson also said 6-inch yields exceed 3-inch production across CW lasers, EMLs and photodiodes. A third 6-inch site in Zurich is expected to begin production in the first half of calendar 2027.
COHR Broadens AI Optics Revenue Streams
Anderson stated optical circuit switching revenues rose sequentially in the fiscal fourth quarter and should grow significantly through fiscal 2027 as manufacturing expands. He sized the OCS opportunity at more than $4 billion.
COHR’s CEO said co-packaged optics revenues should begin ramping in the December quarter. Responding to a Rosenblatt Securities analyst, he said that production wafers for those shipments have started.
Anderson also highlighted PhotonLink, an integrated-optics platform scheduled for a September launch, while multi-rail revenues are expected in the first half of calendar 2027. He said Coherent sees comparable content opportunities in CPO and NPO.
Coherent Defends the Margin Expansion Path
CFO Luther said fiscal fourth-quarter non-GAAP gross margin reached 40.2%, up 66 basis points sequentially and 215 basis points year over year. She tied further improvement to 6-inch indium phosphide, product mix, pricing and cost actions.
Responding to a Morgan Stanley analyst, Luther said a 6-inch wafer provides four times the output of a 3-inch wafer at half the cost. Anderson added that higher 6-inch yields reinforce that benefit.
A Raymond James analyst asked about the greater-than-42% gross-margin target. Luther said the bulk of the 6-inch ramp and new products such as 1.6T, OCS, CPO, multi-rail and thermal-management solutions remain ahead.
COHR Locks in Demand Through Long-Term Agreements
Responding to a BNP Paribas analyst, Anderson said fiscal 2027 is essentially booked and purchase orders extend through calendar 2027, with customers now placing orders into calendar 2028.
Anderson also added long-term agreements often extend through the end of the decade and generally include rising annual supply commitments, pricing terms and minimum-demand guarantees. That provides visibility for capacity planning and pricing.
Responding to a Needham analyst, Anderson added assembly and test capacity are not the primary bottlenecks. The central constraint remains indium phosphide output.
Coherent Enters Fiscal 2027 Focused on Execution
Luther said capital spending will rise sequentially again in the fiscal first quarter as Coherent expands data center and communications capacity. She also emphasized operating leverage after fiscal fourth-quarter non-GAAP operating margin reached 21.8%.
Anderson closed the call by centering fiscal 2027 on capacity expansion, new growth platforms and sustained customer demand, with Datacenter & Communications remaining the primary growth engine.
COHR Rank and Style Scores Send Mixed Signals
COHR carries a Zacks Rank #3 (Hold). Its Momentum Score of B is the strongest style signal, while the Value Score of D, Growth Score of F and VGM Score of F reflect weaker grades across those measures.
Zacks Style Scores complement the Zacks Rank, with A and B considered stronger grades. The current combination lacks the stronger profile associated with Zacks Rank #1 (Strong Buy) or 2 (Buy) stocks paired with stronger scores. Also, the rank can change as earnings estimates are revised after the just-reported results. You can see the complete list of today’s Zacks #1 Rank stocks here.
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Coherent Corp. (COHR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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