What happened
Shares of Coherent (COHR +1.21%) plunged 23.7% this week, according to data provided by S&P Global Market Intelligence, after the semiconductor and optical materials manufacturer announced solid quarterly results, but followed with discouraging forward guidance.
To be sure, Coherent fell as much as 34% early Wednesday following its fiscal fourth-quarter 2023 report, which saw revenue climb 35.9% year over year to $1.205 billion (above the high end of guidance). That translates to adjusted (non-GAAP) earnings of $94.9 million, or $0.41 per share (also near the high end of guidance). Analysts, on average, were modeling earnings of only $0.38 per share on revenue of $1.15 billion.
NYSE: COHR
Key Data Points
So what
Coherent management noted that the company achieved a strong end to its fiscal year despite "continuing post-pandemic inventory digestion and macroeconomic weakness." Geopolitical strife between the U.S. and China appears to be further compounding these issues.
However, management also stated that those macroeconomic headwinds continue to have a negative effect on "nearly all our end markets" as well as the company's near-term growth and visibility. As such -- and with the caveat that it's well-positioned to benefit from powerful secular market trends when these headwinds subside -- Coherent is not assuming it will see signs of meaningful improvement in the coming fiscal year.
More specifically, the company issued forward guidance for full fiscal-year 2024 revenue of $4.5 billion to $4.7 billion, with adjusted earnings per share of $1.00 to $1.50. By contrast, most analysts were expecting fiscal 2024 earnings of $2.95 per share on revenue to be closer to $5.1 billion.
Now what
To be fair, Coherent did add that due to supply chain ramp constraints, this guidance excludes "several hundred million dollars" in revenue related to the recent surge in demand for transceivers for artificial intelligence-driven data center buildouts.
That's all well and good, of course, and perhaps Coherent is underpromising with the intention of overdelivering. But if one thing is clear in this market, it's that investors hate being told to hurry up and wait for incremental growth to materialize when there are plenty of other compelling places to put their money to work.
