Coherent posts 34% Q2 revenue growth, boosts margins 147 bps
Coherent’s Datacenter & Communications segment generated over 70% of Q2 FY26 sales, fueling 34% year-over-year revenue growth and a 147-basis-point margin expansion. The company holds $899m cash against $106m current debt and trades at a forward P/E of 37.9x.
1. Q2 Financial Highlights
Coherent’s Datacenter & Communications segment accounted for over 70% of Q2 FY26 revenue, driving 34% year-over-year and 11% sequential growth. Operating margin expanded by 147 basis points year-over-year and 40 basis points sequentially, reflecting improved operational efficiency.
2. Balance Sheet Strength
As of end-December, Coherent held $899 million in cash against $106 million in current debt and $3.2 billion in long-term debt. A times interest earned ratio of 2.5x and a current ratio of 2.25 (versus an industry average of 1.59) highlight strong liquidity and debt coverage.
3. Valuation Metrics
Shares trade at a forward 12-month P/E of 37.94x, above the 12-month median of 26.21x for the company. This premium valuation reflects investor expectations for sustained AI infrastructure demand and growth.
4. Growth Drivers and Outlook
Management expects 1.6 Tb and 800-gig transceivers along with Optical Circuit Systems to be primary revenue drivers. Expansion of indium phosphide wafer production in Sherman, Texas and Jarfalla supports a robust product pipeline for AI infrastructure.