Value
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 2.1 |
| P/S | 5.8 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 7.3 |
| PEG | 10.0 |
| Analyst target | 9.0 |
- ▸Forward P/E: 17.1x
- ▸PEG: 0.07
COHR · Why this verdict
Why Coherent (COHR) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score6.1/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Four consecutive earnings beats and 20% revenue growth demonstrate execution momentum, but free cash flow is negative despite reported profitability, the stock trades at a premium multiple with only 4.2% headroom to resistance, and sole-source supplier exposure introduces operational fragility — the risk/reward is unfavorable at current levels.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company has beaten consensus estimates in all four of the last four quarters with an average upside surprise of roughly 7%, alongside revenue growth of 20% year over year, demonstrating consistent top- and bottom-line execution. Earnings | Beat rate stays at 4 of 4 and revenue growth remains above 15% year over year over the next four quarters. | ↓Deteriorating |
| CounterThe most recent quarter's upside surprise narrowed to just 1.1%, the smallest in the streak, which may indicate that execution is beginning to moderate as the business scales and consensus closes the gap. | ||
Free cash flow is negative relative to reported net income — at negative 42% of earnings — a red flag indicating that reported profits are not converting into cash, constraining financial flexibility for debt reduction, reinvestment, or shareholder returns. Quality | Free cash flow turning positive and FCF-to-net-income conversion reaching at least 50% for 2 consecutive quarters would signal that earnings quality is improving meaningfully. | →Stable |
| CounterA Piotroski F-Score of 8 out of 9 reflects broad balance-sheet strength, and negative free-cash-flow-to-earnings in a high-growth phase may reflect timing effects or large non-cash items rather than a structural disconnect between accounting and economic reality. | ||
At a forward price-to-earnings multiple of 50.6 times, the stock screens as expensive, and with only 4.2% headroom to the resistance take-profit level and a reward-to-risk ratio of 0.60-to-1, the near-term geometry does not compensate for the risk taken. Value | A meaningful re-rating — either through earnings multiple compression or a take-profit target revision implying more than 15% upside from current levels — would be required before the setup is actionable. | Tripped→Stable |
| CounterA PEG ratio of 0.18 suggests the multiple may be justifiable given the growth rate; if earnings continue to beat and the 20%-plus growth profile is sustained, the premium valuation could persist for an extended period. | ||
The company relies on sole-source or limited-source suppliers for key inputs, meaning a disruption to any one of those supply relationships could materially impair production without a ready substitute and without lead time to qualify an alternative. Bear case | Progress toward supplier diversification — evidenced by management commentary or 10-K risk-factor language reducing sole-source references — would lower this operational risk. | ↑Improving |
| CounterSole-source relationships are common in precision manufacturing and can reflect technical complexity or negotiated exclusivity rather than fragility; the strong Piotroski F-Score suggests the supply chain has not yet produced financial impairment. | ||
The company has beaten consensus estimates in all four of the last four quarters with an average upside surprise of roughly 7%, alongside revenue growth of 20% year over year, demonstrating consistent top- and bottom-line execution.
↓DeterioratingEarnings
- Expectation
- Beat rate stays at 4 of 4 and revenue growth remains above 15% year over year over the next four quarters.
CounterThe most recent quarter's upside surprise narrowed to just 1.1%, the smallest in the streak, which may indicate that execution is beginning to moderate as the business scales and consensus closes the gap.
Free cash flow is negative relative to reported net income — at negative 42% of earnings — a red flag indicating that reported profits are not converting into cash, constraining financial flexibility for debt reduction, reinvestment, or shareholder returns.
→StableQuality
- Expectation
- Free cash flow turning positive and FCF-to-net-income conversion reaching at least 50% for 2 consecutive quarters would signal that earnings quality is improving meaningfully.
CounterA Piotroski F-Score of 8 out of 9 reflects broad balance-sheet strength, and negative free-cash-flow-to-earnings in a high-growth phase may reflect timing effects or large non-cash items rather than a structural disconnect between accounting and economic reality.
At a forward price-to-earnings multiple of 50.6 times, the stock screens as expensive, and with only 4.2% headroom to the resistance take-profit level and a reward-to-risk ratio of 0.60-to-1, the near-term geometry does not compensate for the risk taken.
Tripped→StableValue
- Expectation
- A meaningful re-rating — either through earnings multiple compression or a take-profit target revision implying more than 15% upside from current levels — would be required before the setup is actionable.
CounterA PEG ratio of 0.18 suggests the multiple may be justifiable given the growth rate; if earnings continue to beat and the 20%-plus growth profile is sustained, the premium valuation could persist for an extended period.
The company relies on sole-source or limited-source suppliers for key inputs, meaning a disruption to any one of those supply relationships could materially impair production without a ready substitute and without lead time to qualify an alternative.
↑ImprovingBear case
- Expectation
- Progress toward supplier diversification — evidenced by management commentary or 10-K risk-factor language reducing sole-source references — would lower this operational risk.
CounterSole-source relationships are common in precision manufacturing and can reflect technical complexity or negotiated exclusivity rather than fragility; the strong Piotroski F-Score suggests the supply chain has not yet produced financial impairment.
Per-dimension breakdown
Quality
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.7 |
| ROA | 2.3 |
| Gross margin | 3.5 |
| Op margin | 4.7 |
| Net margin | 5.7 |
| Current ratio | 8.3 |
| FCF quality | 0.0 |
| Moat | 6.4 |
| Piotroski F | 8.9 |
- ▸Earnings quality RED FLAG: -81% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
Growth
10.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 10.0 |
- ▸Strong growth: 34% YoY
Momentum
3.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.0 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 2.2 |
| Volume | 3.5 |
- ▸Capitulation risk (RSI 26, below 200MA)
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA but MA still rising (+5.0%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 4.8 |
| Analyst rating | 7.5 |
| Price target | 9.8 |
- ▸Analyst upside: 66%
Insider
5.4/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 4.1 |
| notable moves | 7.0 |
- ▸Insider selling (low materiality) — $8,184,635 (0.018% of mkt cap)
Peer rank
4.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.9 |
| quality rank | 3.2 |
| growth rank | 8.8 |
- ▸Industry growth leader
Technical
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 6.6 |
| support resistance | 7.6 |
| 52w position | 0.8 |
| gap | 5.0 |
Risk (lower is worse)
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.7 |
| days to cover | 9.7 |
| volatility | 0.0 |
| put call | 10.0 |
| implied vol | 0.0 |
| beta | 3.0 |
| debt equity | 8.7 |
| news risk | 5.5 |
- ▸High IV: 95%
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 5.9 |
| news activity | 6.0 |
- ▸Perfect beat streak: 4Q
- ▸Earnings in 5 days
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (5)
- ASYMMETRY:3.3>=1.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.7<4.5
- EARNINGS_PROXIMITY:5d<=7d
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
3.31
Upside
+49.6%
Downside
15.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilitySpeculative — Drawdown -46% (>40% off 52w high)
Investment implication
The F-path SELL output reflects an overall score of 4.8 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Growth at 10.0) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:3.7<4.5, EARNINGS_PROXIMITY:5d<=7d) reinforce the read. Current asymmetry R:R is 3.31 — supplementary context, not the trigger for this path.
The strongest dimensions are Growth at 10.0, Sentiment at 7.3, and Catalyst at 6.4; the weakest are Momentum at 3.7, Peer rank at 4.5, and Quality at 4.7. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of 3.31 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Perfect Beat Streak Growth
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2Negative Fcf Earnings Quality Red Flag
Trip ifFree cash flow turns positive and FCF-to-net-income conversion rises above 50% for 2 consecutive quarters.
- P3Rich Valuation Thin UpsideTripped
Trip ifForward P/E multiple compresses below 35x, or the take-profit target is revised to imply more than 15% upside from $413.84.
- P4Sole Source Supplier Dependency
Trip ifThe company discloses at least 2 additional qualified suppliers for previously sole-sourced components in a public filing, reducing concentration risk.