After Coherent (COHR) held the first of a series of Markets Day events, Stifel analyst Ruben Roy said the event provided a deep technical overview of the company’s vertically integrated technology portfolio. With respect to the communications end market specifically, Coherent expects optics contribution to hardware spending to increase with data rate, which is an assumption that “has been central to our bullish thesis” on Coherent and peers like Lumentum (LITE), the analyst explains. Stifel, which believes that the significant capex investments in AI compute infrastructure will necessitate broader network upgrades and sees Coherent being positioned to benefit “given its leadership positioning in the datacom transceiver market,” keeps a Buy rating and $42 price target on the shares.
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