COHR - Embedded Expectations Analysis - 2018 06 20
Coherent, Inc. (COHR:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 10.8x Uniform P/E, implying bearish expectations for the firm. Moreover, management has concerns about industry trends, growth, and marginsSpecifically, management may have concerns about the challenges associated with building full color microLED displays, and may also be concerned about capacity investments in OLED fabs. Additionally, they may lack confidence in the sustainability of sequential double-digit bookings growth as a result of strong semiconductor CapEx, and may have concerns about the sustainability of growth in advanced packaging designs among top-tier smartphone manufacturers and HDI board usage among second-tier manufacturers. Moreover, they may lack confidence in the sustainability of net sales growth at current levels in their Microelectronics and Materials Processing and Markets segments, and may have concerns about their ability to meet their gross margin guidance for Q3
Coherent is a provider of lasers, laser-based technologies and laser-based system solutions in a range of commercial, industrial and scientific applications. The company reporting segments are: OEM Laser Sources (OLS) and Industrial Lasers and Systems (ILS). The company's OLS business segment is focused on laser sources and optical sub-systems primarily used in microelectronics manufacturing, medical diagnostics and therapeutic medical applications, as well as in scientific research. The company's ILS business segment delivers laser sources, sub-systems and tools used for industrial laser materials processing, serving end markets like automotive, machine tool, consumer goods and medical device manufacturing.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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