Laser maker Coherent (NYSE: COHR) saw its shares rise 19.5% through 11:45 a.m. ET on Monday after the company announced it was hiring Jim Anderson, CEO of Grid semiconductor, to become its own new CEO. Conversely, Lattice shares are down 15% on the news.
Lattice simultaneously announced that it has appointed Chief Marketing Officer Esam Elashmawi as interim CEO as it searches for a permanent replacement.
Who is Jim Anderson – and why does everyone want him?
Lattice shares are down significantly from recent highs in March — which may not seem like high praise, or a good reason for Coherent to poach the company’s CEO. However, according to data from S&P Global Market Intelligence, Anderson has been CEO of Lattice since September 4, 2018. And over this extended period, it’s worth noting that Lattice’s shares have roughly quadrupled in value versus a gain in the stock markets. S&P500 of only 100%.
So despite the recent decline, stocks under Anderson’s leadership still outperformed the market’s average stocks by eight times.
This, in a nutshell, could be why Coherent investors are so excited about today’s news – and why Lattice shareholders are so angry about losing Anderson’s leadership.
Will a new CEO drive Coherent stock buying?
Coherent can certainly use the help.
While the company’s shares have performed well lately, up 51% in the past 52 weeks, Coherent has a significant debt load ($3.4 billion in net cash) and is unprofitable. Coherent generates decent free cash flow, about $225 million in the last year. Still, with a valuation of nearly 39 times free cash flow and a growth rate estimated in the low teens, it’s not a cheap stock at all.
Anderson’s first job as head of Coherent, I suspect, will be to leverage that growth rate a bit and help Coherent grow to its valuation.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Coherent. The Motley Fool has a disclosure policy.
Why Coherent Stock Exploded 20% Higher on Monday was originally published by The Motley Fool
