Coherent Corp.

Shortcut’s reasoning.

Guidance anchor: 1Q27 outlook (2026-08-12) is revenue $2.2-2.4bn and non-GAAP EPS $1.85-2.05 (midpoint $1.95), gross margin 39.5-41.5%, opex $400-420m, tax 18-20%. Frozen consensus ($2,304m / $1.97) sits just above the midpoint.

Track record: in each of the last 4 quarters revenue landed 2.0-3.4% above the guidance midpoint and EPS $0.03-0.13 above it; gross margin landed at the midpoint to +20bp and opex at or above the top of the range. The model uses 40.5% GM and $417m opex.

Quarter-specific evidence: InP laser output was up 80% y/y in the June quarter, with capacity doubling by Sep-26 a quarter early. Management guided datacenter growth above 80% y/y and strong sequential communications growth. Innolight's Sep-quarter revenue rose 24.6% q/q, confirming demand, but peers such as Eoptolink were supply-constrained. Model revenue is $2,330m (+1.1% vs consensus): D&C +17.3% q/q and Industrial +1%.

Below the line: net interest/other of $25m (vs $17.6m in 4Q26, as cash falls with ~$600m capex), a 19% non-GAAP tax rate, a ~$3.5m NCI loss and 202.8m diluted shares (consensus implies 203.8m). The result is non-GAAP NI of $409.8m and EPS of $2.02. GAAP EPS is $1.45, after $60m SBC (including the Aug-2026 PSU grants), $69.5m amortization, $25m restructuring/integration and a 25% tax shield.

Probability: the size/history prior (large-cap, S&P 500 since 2026-03-23, 6/6 historical beats) gives 0.874. I lowered it to 0.80 because consensus is already above the guide midpoint, the revenue range is wide ($200m) and industry component supply is tight. The model's +$0.05 edge is about 0.7 consensus standard deviations.

The ~36% October share-price fall reflected rates and AI-financing (CoreWeave) worries with no company-specific news. The CTO said on 2026-10-20 that InP capacity is sold out through 2027. The fall is not treated as fundamental downside evidence.