COHERENT's stock experienced a significant pre-market plunge of 5.08% on Monday, as the optical communications company faced heavy selling pressure.

The decline follows sustained profit-taking activity since the company's early May earnings release, with the stock breaking below a key technical support level. This technical breakdown has triggered additional selling, exacerbating the downward move. Furthermore, the broader optical communications sector has shown weakness, contributing to negative sentiment around COHERENT shares.

Adding to the pressure are valuation concerns highlighted in recent analysis. A discounted cash flow model suggests the stock may be overvalued by approximately 21.8%, providing a fundamental rationale for some investors to reduce their positions. While the company is recognized as a key player in the AI infrastructure supply chain, short-term profit-taking and valuation reassessments appear to be driving the current price action.