DCF Studio

    COHR · NYQ · Technology

    Coherent Corp.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 23.14

    Market price

    USD 317.36

    Implied upside

    -92.7%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Wrong toolThis model values the shares at 7.3% of the market price. A gap that size is a modelling failure rather than a view - most often an unusable beta, a currency or units mismatch, or a cashflow base that does not represent the business. Read the figures below as diagnostics, not as a call.

    Current EV/EBITDA of 44.8x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 23.14-92.7%
    Exit multiple
    USD 115.97-63.5%
    Market price
    USD 317.36

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m216m431mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueUSD 7.9bnUSD 8.8bnUSD 9.8bnUSD 10.9bnUSD 12.2bn+11.3%
    EBITUSD 516.6mUSD 575.1mUSD 640.2mUSD 712.6mUSD 793.3m+11.3%
    NOPATUSD 408.1mUSD 454.3mUSD 505.7mUSD 563.0mUSD 626.7m+11.3%
    Add depreciation & amortisationUSD 831.2mUSD 925.3mUSD 1.0bnUSD 1.1bnUSD 1.3bn+11.3%
    Less capital expenditureUSD -772.6mUSD -860.0mUSD -957.4mUSD -1.1bnUSD -1.2bn+11.3%
    Less increase in working capitalUSD -185.8mUSD -206.9mUSD -230.3mUSD -256.3mUSD -285.4m+11.3%
    Free cashflow to firmUSD 280.9mUSD 312.7mUSD 348.1mUSD 387.5mUSD 431.4m+11.3%
    Discount factor0.93660.82160.72070.63220.5545-
    Present valueUSD 263.1mUSD 256.9mUSD 250.9mUSD 245.0mUSD 239.2m-2.4%
    Present Value Of The ForecastUSD 1.3bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.740Reported 2.104, pulled toward 1.0 (Blume)
    Cost of equity14.57%Risk-free + beta x equity risk premium
    Cost of debt5.12%Interest expense / average total debt
    Market capitalisationUSD 62.1bn94.6% of capital
    Total debtUSD 3.5bn5.4% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC14.00%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 23.14

    79% of EV

    Forecast FCFF, final year
    USD 431.4m
    Capex at depreciation, working capital in reinvestment
    USD 1.2bn
    Less reinvestment at g/ROIC (17.9% of NOPAT)
    USD -211.9m
    Capitalised
    USD 974.7m
    ROIC (WACC floor)
    14.0%
    Terminal value, undiscounted
    USD 8.7bn
    Terminal value, discounted
    USD 4.8bn
    Enterprise value
    USD 6.1bn
    Less net debt
    USD 1.6bn
    Equity value
    USD 4.5bn

    Exit at 20.0x EBITDA

    Value per shareUSD 115.97

    95% of EV

    Terminal value, undiscounted
    USD 41.4bn
    Terminal value, discounted
    USD 23.0bn
    Enterprise value
    USD 24.2bn
    Less net debt
    USD 1.6bn
    Equity value
    USD 22.7bn

    Spread between methods: 133%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    12.00%29.6229.7729.9230.0730.23
    13.00%25.9826.1226.2526.3926.52
    14.00%22.9023.0223.1423.2623.38
    15.00%20.2620.3720.4720.5820.69
    16.00%17.9718.0718.1718.2718.36

    Outlined: this model. Green text: above today's price of 317.36. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year11.3%93.4%+82.1pp
    EBIT margin6.5%92.3%+85.8pp
    Discount rate14.0%2.7%-11.3pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.