What happened

Shares of Coherent (COHR) fell 25.2% in May, according to data from S&P Global Market Intelligence . The industrial laser and equipment company's stock started the month off with sell-offs on the heels of its second-quarter report on April 30, and indications that the U.S. and China were getting farther away from a potential trade deal sent a fresh wave of volatility through the broader market and triggered additional negative momentum for Coherent. 

COHR Chart

COHR data by YCharts

Because its lasers are used in industrial processes for manufacturing things like organic light-emitting diodes, Coherent stock has traded closely in relation with the outlook for a trade deal with China. Highlighting the uncertainty the trade situation has created, Coherent has opted not to give full-year or longer term guidance. It's also possible that news published on May 8, stating that the company would make changes to its board of directors, had a negative impact on the stock, although there isn't necessarily a clear relationship between the two occurrences.

A Coherent laser combiner.

Image source: Coherent. 

So what

Revenue for the company's second quarter came in at $372.9 million, down 22.5% year over year but still ahead of the average analyst estimate's call for sales of roughly $369 million. Adjusted earnings per share for the period were $1.61 -- down from $3.37 in Q2 2018, but still significantly ahead of the average analyst estimate's target for per-share earnings of $1.47.

The Asian market accounted for roughly 51% of the company's total second-quarter sales. Japan and South Korea each contribute a substantial portion of the segment's geographic sales, but China remains the biggest contributor. Accordingly, it's not surprising the stock lost ground as trade disputes took a turn for the worse last month.  

Now what

Coherent stock has benefited from a market rebound in June, and its shares trade up roughly 11% in the month so far. 

COHR Chart

COHR data by YCharts

Management expects revenue for the third quarter to be between $335 million and $355 million and is guiding for a non-GAAP gross margin between 37% and 40%. Those figures compare with $482.3 million in revenue and a non-GAAP gross margin of 46.4% that the company posted in the third quarter of 2018. While the company's OLED business is expected to decline substantially this year, Coherent expects to post a record year for its original equipment manufacturer components business.

Shares trade at roughly 18 times this year's expected earnings.