Applied Optoelectronics Receives a Sell from Rosenblatt Securities

By Ryan Adsit

In a report issued on July 9, Jun Zhang from Rosenblatt Securities reiterated a Sell rating on Applied Optoelectronics (NASDAQ: AAOI), with a price target of $30. The company’s shares closed yesterday at $45.79.

Zhang commented:

“We believe demand for Microsoft’s (MSFT: NR) 100G CWDM4 module will be lower than expected in Q3, seriously impacting AAOI, which has MSFT as its second largest customer. Gross margins will continue to be pressured by the shift in product mix toward 100G CWDM4 modules in the second half of the year and pricing pressures for the 100G optical module. Our research suggests Intel (INTC: Sell) has solved its yield issues and is now ready to ramp its capac- ity in Q3. This will likely increase competition in the CWDM4 market in the sec- ond half of this year. We reiterate our Sell rating and $30 price target. We continue to be wary of AAOI’s gross margins and revenue growth sustaina- bility, despite possible revenue benefits from strong Facebook (FB: NR) de- mand growth.”

According to, Zhang is a 1-star analyst with an average return of -3.4% and a 50.0% success rate. Zhang covers the Consumer Goods sector, focusing on stocks such as Himax Technologies, Lumentum Holdings, and Synaptics Inc.

The word on The Street in general, suggests a Moderate Buy analyst consensus rating for Applied Optoelectronics with a $40 average price target.

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The company has a one-year high of $103.41 and a one-year low of $22.54. Currently, Applied Optoelectronics has an average volume of 1.36M.

Based on the recent corporate insider activity of 113 insiders, corporate insider sentiment is neutral on the stock.

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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.