Coherent Corp. (NYSE: COHR), a manufacturer of optical materials and semiconductors, jumped in pre-market trading on Tuesday after the company announced a $1 billion investment by Denso Corp. and Mitsubishi Electric Corp. in its Silicon Carbide business.
Pick the best stocks and maximize your portfolio:
- Discover top-rated stocks from highly ranked analysts with Analyst Top Stocks!
- Easily identify outperforming stocks and invest smarter with Top Smart Score Stocks
According to the terms of the transaction, Denso and Mitsubishi Electric will each invest $500 million in the Silicon Carbide business for a non-controlling interest of 12.5% each while Coherent will own the remaining 75% of the business. Before the completion of this transaction, the company stated that it would “separate and contribute the Business to a subsidiary.”
Coherent added that the company will continue to control and operate the business while it will continue to be headed by Sohail Khan, Coherent’s EVP of New Ventures & Wide-Bandgap Electronics Technologies. The company’s Silicon Carbide business will also enter into long-term supply arrangements with DENSO and Mitsubishi Electric for 150 mm and 200 mm silicon carbide (SiC) substrates and epitaxial wafers.
The firm estimates that the silicon carbide total addressable market will grow at a compound annual growth rate of 28% from $3 billion last year to $21 billion in 2030. As a result, the company expects this investment “to fund the manufacturing expansion of the Business’s substrates and epitaxial wafers and, in combination with the concurrent supply agreements, enhance its position in the market.”
Is Coherent a Good Stock to Buy?
Analysts are cautiously optimistic about COHR stock, with a Moderate Buy consensus rating based on 10 Buys and five Holds.
