) shares climbed Thursday after Needham upped its investment recommendation on the electronic equipment manufacturer to strong buy from buy.
Analyst John Harmon cited attractive prices in the stock. After Coherent's third quarter earnings per share report, prices experienced a recent pull-back that moved shares' valuation to extremely attractive levels, says Harmon. Although the third quarter was disappointing due to the late shipment of complex products, it's a one-time issue and not due to the loss of market share, Harmon says. He notes that the company has a strong record of recovering from such fluctuations and also dominates the laser industry in terms of size, product breadth, balance sheet, and cash generation. Harmon also thinks company management has set a strong record of execution. He set a $38 price target based on 25 times his $1.54 calendar year 2006 earnings per share estimate.