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

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·1 min read
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  • 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

View More Analyst Ratings for IIVI
View the Latest Analyst Ratings

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