Coherent, Inc. (COHR): Raising Estimates On Rofin Acquisition - Needham

Needham & Company analyst, James Racchiuti, reiterated his Buy rating on shares of Coherent (NASDAQ: COHR) and raised the price target to $145 after the company hosted a call to provide updated guidance following the completion of its acquisition of Rofin-Sinar. Layering in the lower-margin Rofin business will result in lower gross margin and operating margins for the combined business. However, the analyst believes the acquisition will still be solidly accretive on a non-GAAP basis.

COHR’s near-term prospects should continue to be driven by the conversion of its sizable multi-year OLED-related backlog, which the analyst estimates at around $700M. Longer term, assuming COHR executes on the integration, the addition of Rofin should provide greater balance to COHR by opening up the material processing market as a much larger vertical and giving the company meaningful exposure to fiber lasers.

For this reason, the analyst raised estimates for F17 and F18, driving up the PT to $145 from $130.

For an analyst ratings summary and ratings history on Coherent click here. For more ratings news on Coherent click here.

Shares of Coherent closed at $125.89 yesterday.

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