Coherent Corp. (NYSE: COHR) released a fourth-quarter performance that outpaced analyst forecasts on both revenue and adjusted earnings per share, and it presented an assertive revenue and profit outlook for the start of fiscal 2027. Still, the market responded with a roughly 5% drop in the stock following the announcement, reversing an earlier 8% gain that had occurred after peer Lumentum posted strong results.
For the quarter, Coherent recorded adjusted EPS of $1.74, beating the consensus estimate of $1.62 by $0.12. Revenue reached $2.05 billion, topping the $1.98 billion forecast and representing a 34% increase year-over-year. These results arrived alongside guidance for the first quarter of fiscal 2027 that also exceeded analyst expectations.
The company outlined first-quarter revenue between $2.2 billion and $2.4 billion, compared with a consensus of $2.13 billion. The midpoint of that range, $2.3 billion, is 8% higher than the street projection. Coherent provided adjusted EPS guidance of $1.85 to $2.05 for the quarter, above the $1.77 estimate, with a midpoint of $1.95 that comes in 10% above expectations.
Management highlighted margin expansion in the fourth quarter. Adjusted gross margin widened to 40.2%, up 215 basis points year-over-year, while GAAP gross margin rose to 38.5%, an increase of 277 basis points versus the prior-year quarter. On a GAAP basis, EPS was $1.19, an improvement of $2.02 from a loss of -$0.83 in the year-ago period.
"Fiscal 2026 was an outstanding year for Coherent, with record revenue, significant margin expansion, and non-GAAP EPS growth that was more than twice the rate of revenue growth," said Jim Anderson, CEO. He added that the company is entering fiscal 2027 with strong customer demand, expanded production capacity, and several new growth platforms beginning to ramp.
CFO Sherri Luther attributed part of the earnings improvement to strong operational execution that translated revenue growth into meaningful margin gains and earnings growth. For the first quarter of fiscal 2027, Coherent expects adjusted gross margin in a range between 39.5% and 41.5%.
On expense and tax planning, the company projected adjusted first-quarter operating expenses of $400 million to $420 million and a tax rate between 18% and 20%.
Despite the robust topline beat, margin improvement, and bullish initial-quarter guidance, shares moved lower after the release. Earlier in the trading session the stock had climbed roughly 8% following momentum from a peer's strong report, but the after-release reaction trimmed that advance and ended the day with the 5% decline.
Market context and takeaways
The report shows a company converting revenue growth into outsized earnings expansion and margin improvement, with management pointing to demand and capacity increases as the operational levers for continued progress. The juxtaposition of strong fundamentals and a stock pullback highlights short-term market volatility in response to earnings news.