Coherent (NYSE:COHR) was lifted to Buy from Neutral with a $45 per share price target at Rosenblatt on Thursday.
Analysts told investors in a note that the selling following the company's conservative FY24 guidance is overdone.
"We are upgrading COHR to Buy after today's 30% sell-off on the weaker than expected FY24 guidance," they wrote.
"In our opinion, the selling was overdone and was likely exacerbated by investor confusion and disappointment with the specifics of the FY24 outlook," they added. "We view COHR as one of the two biggest beneficiaries in our coverage, along with Arista (ANET, Buy rated), from AI Networking."
They explained that COHR gets ~30% of its revenues from Datacom products and ~20% of total revenues from Web Scalers.
They said that while there are headwinds for legacy Datacom products, "there is strong growth in 800G for generative AI."
"We believe the FY24 guidance is conservative, and think estimates are more likely to go higher than lower from here," the analysts concluded.