Applied Optoelectronics (AAOI) Receives a Hold from B.Riley FBR

By Austin Angelo

In a report released today, Dave Kang from B.Riley FBR maintained a Hold rating on Applied Optoelectronics (AAOIResearch Report), with a price target of $10. The company’s shares closed yesterday at $10.21, close to its 52-week low of $8.56.

Kang noted:

“AMC, AAOI reported 2Q sales/EPS of $43.4M/$(0.26), above consensus of $42.5M/$(0.37). The 3Q outlook included sales/EPS of $46M-$49M/$(0.21)-$(0.28), compared with consensus of $49.6M/$(0.28). GM increased from 25.5% in 1Q to 27.2% in 2Q but well below 40.4% in 2Q18; 3Q GM is expected to be in the range of 27%-29%. There appear to be early signs of recovery from major datacenter (DC) customers as excess inventories are nearly depleted. Nevertheless, we believe volume growth will most likely be offset by pricing erosion. In addition, AAOI’s 200G revenue is immaterial, implying it is not in Alphabet’s (GOOGL) 200G supply chain, which we believe is the only major ICP (Internet Content Provider) that is actively deploying 200G while others wait for 400G.”

According to, Kang is a 5-star analyst with an average return of 18.9% and a 62.8% success rate. Kang covers the Consumer Goods sector, focusing on stocks such as DASAN Zhone Solutions Inc, Acacia Communications, and Luna Innovations Inc.

The word on The Street in general, suggests a Hold analyst consensus rating for Applied Optoelectronics with a $9.70 average price target, representing a -5.0% downside. In a report issued on July 29, J.P. Morgan also initiated coverage with a Hold rating on the stock with a $11 price target.

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Based on Applied Optoelectronics’ latest earnings release for the quarter ending March 31, the company reported a quarterly GAAP net loss of $10.47 million. In comparison, last year the company had a net profit of $8.03 million.

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Applied Optoelectronics, Inc. engages in the design and manufacture of optical communications products. Its products include optical devices, such as laser diodes, photodiodes, related modules and circuitry, and equipment for applications in fiber-to-the-home, cable television, point to point communications and wireless.