COHR · Cash conversion and valuation assumptions
FY2026 operating cash flow of $79.5m was below $1.103bn in capital expenditure; valuation remains sensitive to cash conversion and the assumed multiple.
At a fixed28× EBIT, the central case is about$208 versus the September17 reference$295.98. It assumes $10.6bn CY2027 revenue and15% operating margin, about1.6× Q4 FY2026 annualized EBIT. These values depend on the stated operating and valuation assumptions.
Dated reference：USD 295.98 ·
Major downside risks：FY2026 operating cash was only $79.5m against $1.103bn capex. Inventory, yields or slower shipments can hurt cash and margins together; all three operating scenarios hold the multiple at 28× EBIT. Multiple risk is shown separately in the valuation sensitivity analysis.
Follow-up review points：Next quarterly results expected in calendar Q4 2026; exact earnings date unconfirmed. Compare sales with Q1 FY2027 guidance of $2.2–2.4bn. Track operating cash flow, capital expenditure and working-capital changes in subsequent reports. Compare price with explicitly stated valuation assumptions; the bull scenario alone does not establish investment value.
Assumptions, capital structure and sources
EBIT means operating profit after depreciation, amortization and stock compensation.
CY2027 income bridge: GAAP gross margin minus R&D, SG&A and other operating costs, retaining depreciation/amortization and SBC. Q4 FY2026 actual anchors:38.5% gross margin,10.6% R&D,13% SG&A,12.4% EBIT. All operating cases fix28× EBIT; the separate20/28/36× table changes only the multiple. A mixed-date $59.4bn EV proxy divided by the Q1 guidance GAAP-like annualization gives about45×;28× stresses about38% compression. The proxy subtracts the previous quarter$192m GAAP/adjusted gap from guidance—it is not management GAAP guidance, a peer multiple or a justified fair price.
Start with June 30 cash/investments of $1,987.018m and debt including finance leases of $3,271.715m; August 10 actual shares are a different date. Exclude $606.378m restricted cash. Preferred conversion and NVIDIA placement are already included. Note 15 does not provide a current minority fair-value estimate: the deductions below are explicit sensitivity assumptions. Operating rents remain in EBIT, so operating lease liabilities are not deducted again.
- Actual common shares
- 195.832246 million · 2026-08-10 Source ↗
- Cash + short-term investments
- $1,987.018 million · 2026-06-30 Source ↗
- Debt principal + finance leases
- $3,271.715 million · 2026-06-30 Source ↗
- Preferred stock remaining
- $0; converted shares already included · 2026-06-30 Source ↗
- Minority book value, not fair value
- $334.705 million · 2026-06-30 Source ↗
- Operating cash flow / capital expenditure
- $79.514 / $1,102.909 million · FY2026 ended 2026-06-30 Source ↗
- Outstanding options / unvested RSU units
- 376,536 / 2,406,714 · 2026-06-30 Source ↗
Bear · Research assumptions
Revenue below annualized Q1 midpoint9.2bn; GM37% deteriorates1.5pp from Q4, RD/SGA deleverage to11%/14%; remaining othercost1%. Cashconversion only partially recovers. EBIT margin=37% gross-11% R&D-14% SG&A-1% other. Other cost1% assumes easing from Q4~2.5%. July2026–December2027 independent OCF/capex/netdebt assumptions (USDm):1000/1800/500. Derived cash=1987.018+OCF-capex+netdebt=1687.018. Capex annualized remains at/above FY26$1103m; even bear OCF assumes recovery. No full working-capital forecast proves this funding feasible.
All amounts below are USD million; shares are million shares.
EBIT = 8,200 × 11% = 902
Enterprise value = 902 × 28 = 25,256
Common equity = 25,256 + 1,687 cash + 0 other assets − 3,771.7 debt − 0 preferred − 350 minority claims − 0 other claims = 22,821.3
Per share before additional uncertain claims = 22,821.3 ÷ 207 = $110.25
At this multiple and capital structure, matching the reference price requires the operating metric of 2,275.1 million USD.
Base · Research assumptions
Revenue15.2% above annualized Q1 midpoint9.2bn; GAAP GM39.5% improves1pp vs Q4, RD10.5%, SGA13%, othercost1%; EBIT15% is derived, not selected independently. EBIT margin=39.5% gross-10.5% R&D-13% SG&A-1% other. Other cost1% assumes easing from Q4~2.5%. July2026–December2027 independent OCF/capex/netdebt assumptions (USDm):2100/2400/0. Derived cash=1987.018+OCF-capex+netdebt=1687.018. Capex annualized remains at/above FY26$1103m; even bear OCF assumes recovery. No full working-capital forecast proves this funding feasible.
All amounts below are USD million; shares are million shares.
EBIT = 10,600 × 15% = 1,590
Enterprise value = 1,590 × 28 = 44,520
Common equity = 44,520 + 1,687 cash + 0 other assets − 3,271.7 debt − 0 preferred − 700 minority claims − 0 other claims = 42,235.3
Per share before additional uncertain claims = 42,235.3 ÷ 203 = $208.06
At this multiple and capital structure, matching the reference price requires the operating metric of 2,227.5 million USD.
Bull · Research assumptions
Revenue41.3% above annualized Q1 midpoint9.2bn; GAAP GM41.5% improves3pp vs Q4, RD10%, SGA12.5%, othercost1%; EBIT18% needs utilization/mix and is not guidance. EBIT margin=41.5% gross-10% R&D-12.5% SG&A-1% other. Other cost1% assumes easing from Q4~2.5%. July2026–December2027 independent OCF/capex/netdebt assumptions (USDm):3300/3000/-500. Derived cash=1987.018+OCF-capex+netdebt=1787.018. Capex annualized remains at/above FY26$1103m; even bear OCF assumes recovery. No full working-capital forecast proves this funding feasible.
All amounts below are USD million; shares are million shares.
EBIT = 13,000 × 18% = 2,340
Enterprise value = 2,340 × 28 = 65,520
Common equity = 65,520 + 1,787 cash + 0 other assets − 2,771.7 debt − 0 preferred − 1,000 minority claims − 0 other claims = 63,535.3
Per share before additional uncertain claims = 63,535.3 ÷ 206 = $308.42
At this multiple and capital structure, matching the reference price requires the operating metric of 2,248.4 million USD.
Same business outcome, different valuation multiple
Fix revenue, margin, cash, debt and shares at the base assumptions. These are valuation stress choices, not peer medians.
Evidence and model limitations：Valuation multiples are research scenarios, not a completed peer-valuation study or sourced consensus. FY2026 Note 15 reports NCI book value of $334.705m, without a current fair-value estimate; modeled deductions are sensitivities, not reported fair value. Note 17 discloses outstanding options and unvested awards. The August 31 Form 8-K adds performance awards with service and performance conditions through 2030. These are disclosed arrangements, not shares already issued; future vesting remains conditional. Note 14 classifies the NVIDIA price-protection provision as equity, not a derivative liability. The reviewed 10-K and subsequent August 31 8-K do not establish a later settlement result; potential cash or share settlement remains conditional, rather than a confirmed payment.
- Coherent FY2026 Form 10-K ↗ · 2026-08-14
- Quarterly earnings release and guidance ↗ · 2026-08-12
- photonlink ↗ ·
- Coherent performance-based incentive awards Form 8-K ↗ · 2026-08-31