COHR Falls 17% in a Month: Is the Sell-Off an Opportunity?

COHR shares dropped 17% over the past month despite the company posting fiscal 2026 revenue of $7.12 billion, up 22.5% year-over-year. The gains were driven by strong demand from AI datacenter and communications customers, with management signaling robust visibility extending through 2028.

The sell-off reflects investor concern over execution risk tied to the company's $1.1 billion capital expenditure program in fiscal 2026 and declining operating cash flow as multiple product ramps overlap. Improving margins haven't been enough to offset these worries.

Valuation presents another headwind. COHR trades at 26.5X forward earnings, above its industry average, despite the strong revenue momentum and long-term demand tailwinds.

The contrast between operational strength—double-digit revenue growth anchored by AI infrastructure buildout—and deteriorating cash generation creates a binary setup for traders. The elevated capex reflects preparation for sustained datacenter demand, but the timing gap between cash outflow today and margin expansion tomorrow is pressuring the multiple.