BlueStone Capital Announces Investment Opinion on Coherent, Inc.

Business Editors

NOTE TO EDITORS: The following is an investement opinion issued

by BlueStone Capital

NEW YORK--(BUSINESS WIRE)--Feb. 1, 2000

Coherent Reports Better-Than-Expected First Fiscal Quarter;

Upgrading to 1-1 from 2-1; Raising EPS Estimates and Price

Targets

Senior Analyst Scott Baily upgrades Coherent, Inc. (COHR-NASDAQ-$44.06) to 1-1 from 2-1 on better-that-expected first (January) fiscal quarter results. Coherent is active in the medical laser and electro-optical laser areas.

Analyst's Summary

- Following COHR's excellent first fiscal (January 1) quarter

results this week, we are increasing our revenue and EPS

estimates for both fiscal (September) 2000 and fiscal 2001. We

also are raising our intermediate term and long-term price

targets to $65 and $85, respectively, from $52 and $60.

Therefore, given our positive outlook for strong growth over the

next 12 to 24 months, we are upgrading our rating on COHR's stock

to 1-1 from of 2-1.

- COHR reported quarterly revenues and operating EPS of $127.2

million and $0.26, respectively, versus $105.6 million and $0.18

a year ago, for gains of 20.4% and 44.4%. We had been estimating

revenues of $120.0 million and EPS of $0.23. COHR's

higher-than-expected sales and earnings were due to good growth,

higher bookings, and higher margins from all three of its

business segments (Medical Laser, Electro-Optical Laser, Lambda

Physik).

- In light of COHR's solid first fiscal quarter results and given

our expectation for continued growth for fiscal 2000, we are

raising our fiscal 2000 and 2001 revenue estimates to $541

million and $620 million, respectively, from $520 million and

$600 million. We are also raising our fiscal 2000 and 2001 EPS

estimates to $1.15 and $1.35 from $1.10 and $1.28.

- Highlights of the first fiscal quarter include: 1) record sales

and bookings at COHR's subsidiary, Lambda Physik, up 39% and 68%,

respectively, because of excellent order flow from the DUV 

lithography market; 2) continued strong demand for COHR's

market-leading hair removal product line, Lightsheer, with over

200 units being shipped; 3) continued strong demand of its

products in its semiconductor equipment group; and, 4) COHR's

entry into the telecommunications market with the introduction of

its first product, ComEts, into the DWDM network market.

- As we look ahead to the fiscal second quarter and for the

remainder of fiscal 2000, we expect a number of meaningful

announcements from COHR, some of which include: 1) two FDA 

approvals in the next three to six months, the first being COHR's

Opal Photoactivator laser for AMD (age-related macluar

degeneration) by mid-Feburary and the second FDA approval to

treat open angle glaucoma by mid-year; 2) the introduction of

additional products for the telecom market, including both

passive and active components; 3) increased shipments of its

NovaLine DUV lithogaphy lasers used in semiconductor fab 

environments at all three wavelengths, 157nm, 193nm, and 248nm;

and 4) new product introductions from the medical laser segment,

possibly for the vascular market.

BSCP makes a market in the securities of this company.

BlueStone Capital is a full service investment banking and brokerage firm focused on identifying investment opportunities in the emerging growth sector. BlueStone Capital assists clients in maximizing their growth by providing sophisticated investment strategies that are designed to achieve clients' strategic, operating and financial goals.