Coherent is a $3.4 billion laser company that produces both commercial lasers and specialty lasers. You will often see it grouped with semiconductor companies, as many of the precision lasers it produces are used in the semiconductor industry. Shares of COHR began the year at around $60 per share, but rose to $137 by the end of the year. Times have been relatively good for the industry, which sometimes translates into “extra-good” for companies that supply the industry, and such has been the case with Coherent.
In November, Coherent acquired rival laser company Rofin-Sinar, and synergies appear to have begun almost immediately. Analysts believe the company’s revenue will rise from $857 million in 2016 to $1.48 billion in 2017. The really amazing things here are the trailing P/E of 39.9 and the forward P/E of 14.1. By the time that forward P/E is a trailing P/E, it should be at least a 28, barely higher than the broad market, and that is based on the conservative assumption that the company’s growth rate will slow back to previous levels after the dust settles from the merger.
And how does a P/E get from 14 to 28? That’s right—the share price doubles.
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