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Coherent Corp.'s COHR stock price has declined over the year-to-date period. The stock has plummeted 40.7% compared with the industry's 15.1% fall and the 8.8% decline of the Zacks S&P 500 composite.
COHR’s industry peers Yext, Inc. YEXT and Vontier Corporation VNT have declined over the same period. YEXT and VNT have lost 7.1% and 17%, respectively.
YTD Price Performance
Image Source: Zacks Investment Research
In a year, Coherent has underperformed its industry and Yext while outperforming Vontier. COHR shares have gained 5.8%, underperforming the industry’s 12.6% growth and Yext’s 7.5% rise. Shares of Vontier have declined 25.3% in a year.
In the last trading session, the COHR stock closed at $56.1, 102.5% down from the 52-week high of $113.6.
Investors might be readily bent toward buying COHR, which has declined for the past six months. However, the question of whether investors should buy this stock or stay away from it needs to be answered. Let us dive deep.
Telecom Recovery & Datacom Segment Boom Benefit COHR
The Telecom segment’s revenues increased 11% year over year and 16% from the preceding quarter in the second quarter of fiscal 2025. This persistent growth and management’s optimistic outlook indicate an improving demand for this segment. The launch of the latest products, which include 100G, 400G and 800G ZR/ZR+ coherent transceivers that sustained solid demand in the second quarter of fiscal 2025, facilitated Telecom’s recovery.
Rising AI workloads are increasing traffic between data centers, which calls for the telecom industry to boost investments in higher-capacity interconnects, fueling investments in optical transport networks.
The exponential increase in AI results in large data volume, making complex AI models demand faster and more efficient data transmission. The demand for COHR’s datacom products, including high-speed optical transceivers, significantly increased due to this growth cycle. Shipment of 800G transceivers has risen due to robust demand from hyperscalers as they expand AI training and inference workloads.
Management expects 1.6T transceivers to be the primary top-line contributor in 2025, indicating growth beyond the current 800G cycle. Customer evaluation for 1.6T transceivers performed by management shows the smooth transition to the next cycle of technology without hurting the demand for 800G.
In the second quarter of fiscal 2025, Coherent witnessed 3X growth in its indium phosphide (InP) output on a year-over-year basis. InP is vital for Electro-Absorption Modulated Laser and Continuous Wave lasers, which power high-speed optical transmission in AI data centers. Hence, in-house expansion ensures healthy supply-chain control and cost advantages over competitors.