Coherent Corp. completed the separation of its Aerospace & Defense business, now rebranded as Attalon, following its acquisition by Advent International. The transaction streamlines Coherent’s portfolio, allowing the company to concentrate on its core photonics and laser-based solutions for industrial, scientific and medical markets. With over 500 employees transitioning to Attalon and dedicated annual R&D investment of $75 million retained by Coherent, the company expects to sharpen its capital allocation and drive margin expansion in higher-growth commercial segments.

In the most recent quarter, Coherent reported 17% year-over-year revenue growth to $1.58 billion. The Data Center & Communications segment led the advance with a 26% increase, reflecting strong adoption of high-power lasers for photonic interconnects and optical components in AI training clusters. This performance outpaced the industry median revenue growth of 8%, underscoring Coherent’s leadership in essential photonics infrastructure.

The company achieved a 200 basis-point expansion in gross margin during the quarter, driven by improved manufacturing efficiencies and higher average selling prices in its precision optics product lines. Adjusted EPS rose 73% year-over-year, benefiting from operating leverage on the top-line surge and disciplined cost management. Coherent’s forward-looking guidance anticipates further margin tailwinds as volume scales in its laser processing and data center businesses.

Despite leading the sector with 20.8% compound annual revenue growth over the past year, Coherent’s forward PEG ratio stands at 1.04x, roughly 38% below the photonics equipment industry median. This valuation gap highlights investor opportunity, particularly given three structural growth drivers: accelerating AI data center build-outs, ongoing upgrades in fiber-optic networks, and a streamlined portfolio post-divestiture. Analysts rate the stock a Strong Buy, projecting double-digit EPS growth over the next two years.