How Analysts View II-VI’s Acquisition Of Coherent?

Barclays analyst Tom O'Malley downgraded II-VI Inc (NASDAQ: IIVI) to Underweight from Equal Weight with a price target of $56, down from $65.
The analyst believes II-VI shares will continue to be an underperformer saying 3D sensing "is now a headwind," and its core business is a low single-digit grower.
Additionally, the acquired Coherent Inc (NASDAQ: COHR) business is at a cyclical peak, and post-deal, the combined entity would be more significant than three times levered "into a potential correction," O'Malley notes.
Stifel analyst Patrick Ho resumed coverage of Coherent with a Hold rating and $270 PT, implying an 8% upside to reflect the II-VI acquisition price.
Though he has argued that there may be other "better fits" for Coherent, Ho acknowledges many synergies in cost and revenue from this deal, bringing greater diversification and long-term accretion potential for II-VI.
He has concerns over China's approval since geopolitical reasons could stall the approval process.
Price Action: IIVI shares traded lower by 7.59% at $55.99, while COHR was down 1.33% at $249.75 on the last check Monday.

Latest Ratings for IIVI

Oct 2021

Barclays

Downgrades

Equal-Weight

Underweight

Aug 2021

Benchmark

Maintains

Buy

Jul 2021

Citigroup

Downgrades

Buy

Neutral

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