COHR Pre-Earnings Thoughts

The entire AI trade is doing well today.

We had many positive earnings reports across the board yesterday.

Most relevant here is Lumentum of course.

I did a full breakdown here:

And today we have COHR reporting.

After a really strong print from LITE, all eyes will be on COHR.

Pressure is on for sure.

Let’s quickly go over the main things I am interested in.

Will keep this one brief and direct.

Headline expected for Q4 Rev at $1.91-$2.05B, gross margins at 39%-40%, EPS $1.52-$172. I would love to see that Rev number come above $2b. Just like LITE had that psychological number above $1B. This would just be really clean.

Also looking forward to the guide as they said that FY27 growth should exceed FY26 growth. I can’t imagine that hasn’t accelerated. But any more clarity on the rate of acceleration would be great.

Their long term gross margin target is above 42%. Last quarter they were at $39.6%. As the 6-inch ramps, their pricing power increases, 1.6T ramps, NPO and CPO ramp etc. their margins should keep improving. Looking for more clarity here.

2 quarters ago we saw COHR sell off after an amazing LITE print. I think at this time in the market people thought they were direct comps. While many products overlap, they arent apples to apples. Coherent is more broad and a larger rev base. Lumentum is more focused and high margins, but lower rev base. If the market decides to compare COHR’s margins and rate of growth to Lumentum, they will be dissapointed. But I think the market has matured since then. Ideally COHR just continues to become more of a pure play optics.

6-inch is so central to the thesis. We need more and more confirmation that they are making EMLs on 6-inch with good yields. And that 6-inch is a major growth driver for margins. Lets also hear about just how much of their InP production is on 6-inch today, and how they progresses over time.

I am expecting 1.6T to be doing very well, with 800G continuing to go along side with it. Looking forward to any forecasts they see for these two. They do both EML and SiPh based 1.6T so they are well positioned. Curious how customers are approaching this optionality.

LITE had a really strong OCS signal. It’s time for COHR to have one as well. We know about their TAM of over $4B. But when is it going to be major rev, and how much? Also, LITE is obviously very bullish on their tech. Why does COHR deserve to take market share? Convince us.

Focus will definitely be on CPO and NPO after Lumentums call yesterday. I am expecting to hear similar time frames and opportunities. Also want to hear them define what ‘scale up’ means to them. Because lumentum views ‘scale up’ starting with connecting adjacent racks. Where much of the market views scale up as within a rack. I wonder if anyone will ask for more slcairty here.

One underappreciated part of COHRs CPO opportunity is the amount of content per system. I want them to pitch that and show how its much more than the laser for them.

Expecting really bullish signal for scale across here are well. Might be another driver for CIEN and NOK (was stoked to see the delayed reaction in their shares today after weirdly not moving on the call yesterday). Multi Rail as well, which should begin in H1 CY2027. Hopefully that is still on track.

Order duration and LTAs and customer funded capacity is of interest to me as well. Want to hear more about orders extending into 2028 and LTAs into the end of the decade.

Lastly I want to hear more thoughts on China. How they see themselves positioned in it. What strengths they have here. If customers are increasingly seeking out domestic porduction etc.

All in all, expected a very strong print here.

Hopefully the market will be in a place to reward them.