Lasers Light up Coherent

04/03/2017 2:50 am EST


Leo Fasciocco

Investment Columnist and Publisher, Ticker Tape Digest

With annual revenues of $1 billion, Coherent (COHR) makes lasers and related accessories for a range of scientific, commercial and industrial applications, explains breakout specialist Leo Fasciocco, editor of Ticker Tape Digest.

Its 12-month performance chart shows the stock appreciating 126% the past 12 months versus a 13% gain for the stock market.

COHR's long-term chart shows the stock reaching a peak of $65.50 in 2011. The stock then went into a long-term basing pattern. The stock broke out in late 2015 and has since surged to an all-time high.

Technically, the stock has broken out from an eight-week cup-and-handle base. The moves carries the stock to a new all-time high. That is bullish.

The breakout looks solid coming with a widening of the daily spread. That shows ease of price movement through the resistance point. Also, there was a good pick up in volume.

Profits for the next two quarters will be extremely strong. That should be the key driver for the stock.
Net for the upcoming fiscal second quarter ending in March is expected to surge 190% to $2.55 a share from the 88 cents the year before.

Analysts recently lifted their quarterly estimate greatly. Looking out to the fiscal third quarter ending in June, the Street expects a 170% leap in net to $2.43 a share from the 90 cents the year before.

This fiscal year ending in September, analysts are forecasting a 132% surge in net to $9.58 a share from $4.12 a year before. Analysts have recently raised their year earnings forecast significantly in recent days. 

The stock has a price-earnings ratio of 20. We see that as attractive for value-growth investors. Going out to fiscal 2018 ending in September, net is expected to climb 21% to $11.63 a share from the anticipated $9.58 this fiscal year.

The stock has moved higher 6 out of the past 7 earnings reports where there was a significant change. It had a big gain off its last earnings report.

Our research shows that recently COHR has racked up some big gains after its breakouts. That is impressive. We are targeting COHR for a move to $240.  A protective stop can be placed near $194.

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