Applied Optoelectronics (NASDAQ:AAOI) Shares Climb 7% - Time to Buy?

Key Points

• AAOI shares climbed about 7% to roughly $72, although trading volume was 63% below the stock’s average daily volume.
• Applied Optoelectronics exceeded quarterly expectations with $0.06 EPS versus $0.02 expected and revenue of $191.92 million, up 86.3% year over year. However, the company still reported a negative net margin and return on equity.
• Analyst sentiment is mixed: the consensus rating is “Hold” with a $147 target price, while recent targets range from $92 to $220. Insiders have sold about $6.6 million of shares over the past 90 days, even as institutional ownership stands at 61.7%.

Applied Optoelectronics, Inc. (NASDAQ:AAOI - Get Free Report)'s stock price was up 7% during trading on Monday. The stock traded as high as $71.99 and last traded at $72.25. Approximately 3,782,236 shares traded hands during trading, a decline of 63% from the average daily volume of 10,361,657 shares. The stock had previously closed at $67.51.

Analyst Ratings Changes

Several analysts recently issued reports on AAOI shares. Needham & Company LLC cut their price target on Applied Optoelectronics from $220.00 to $190.00 and set a "buy" rating on the stock in a report on Friday, August 7th. Weiss Ratings upgraded Applied Optoelectronics from a "sell (e+)" rating to a "sell (d-)" rating in a research note on Wednesday. Raymond James Financial reaffirmed an "outperform" rating and issued a $178.00 target price on shares of Applied Optoelectronics in a research report on Tuesday, August 11th. Rosenblatt Securities reiterated a "buy" rating and issued a $220.00 target price on shares of Applied Optoelectronics in a research note on Friday, August 7th. Finally, B. Riley Financial reduced their price target on shares of Applied Optoelectronics from $109.00 to $92.00 and set a "neutral" rating for the company in a report on Thursday, October 15th. Three equities research analysts have rated the stock with a Buy rating, two have assigned a Hold rating and one has issued a Sell rating to the stock. According to MarketBeat, the company has a consensus rating of "Hold" and a consensus target price of $147.00.

Applied Optoelectronics Trading Up 9.7%

The firm has a 50-day moving average of $104.03 and a 200 day moving average of $132.40. The company has a current ratio of 2.78, a quick ratio of 2.13 and a debt-to-equity ratio of 0.12. The stock has a market capitalization of $6.26 billion, a price-to-earnings ratio of -94.43 and a beta of 3.85.

Applied Optoelectronics (NASDAQ:AAOI - Get Free Report) last announced its quarterly earnings results on Thursday, August 6th. The semiconductor company reported $0.06 earnings per share (EPS) for the quarter, topping analysts' consensus estimates of $0.02 by $0.04. The company had revenue of $191.92 million during the quarter, compared to analyst estimates of $190.48 million. Applied Optoelectronics had a negative return on equity of 1.98% and a negative net margin of 9.57%. The firm's quarterly revenue was up 86.3% on a year-over-year basis. During the same quarter in the previous year, the firm posted ($0.16) EPS. Applied Optoelectronics has set its Q3 2026 guidance at 0.110-0.260 EPS. As a group, equities analysts predict that Applied Optoelectronics, Inc. will post 0.55 EPS for the current fiscal year.

Insider Activity

In other news, CFO Stefan J. Murry sold 4,000 shares of the company's stock in a transaction on Monday, October 12th. The stock was sold at an average price of $102.87, for a total value of $411,480.00. Following the completion of the sale, the chief financial officer owned 363,168 shares in the company, valued at $37,359,092.16. This represents a 1.09% decrease in their ownership of the stock. The sale was disclosed in a filing with the SEC, which is available through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, insider Hung-Lun Chang sold 32,172 shares of the firm's stock in a transaction dated Tuesday, September 8th. The shares were sold at an average price of $110.21, for a total value of $3,545,676.12. Following the transaction, the insider directly owned 249,276 shares of the company's stock, valued at $27,472,707.96. This represents a 11.43% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. In the last ninety days, insiders have sold 56,887 shares of company stock worth $6,581,484. 3.80% of the stock is owned by company insiders.

Institutional Investors Weigh In On Applied Optoelectronics

Hedge funds and other institutional investors have recently bought and sold shares of the business. BlackRock Inc. bought a new stake in shares of Applied Optoelectronics in the 2nd quarter worth approximately $955,672,000. Renaissance Technologies LLC bought a new stake in Applied Optoelectronics during the first quarter worth approximately $47,817,000. William Blair Investment Management LLC bought a new stake in Applied Optoelectronics during the second quarter worth approximately $74,703,000. Bank of America Corp DE acquired a new position in Applied Optoelectronics in the second quarter worth approximately $33,712,000. Finally, Bank of New York Mellon Corp acquired a new position in Applied Optoelectronics in the second quarter worth approximately $32,567,000. 61.70% of the stock is currently owned by institutional investors.

About Applied Optoelectronics

Applied Optoelectronics, Inc NASDAQ: AAOI develops and manufactures fiber-optic networking products and solutions. Its offerings include optical transceivers, transmitters, receivers, lasers, and related components used to transmit data across fiber-optic networks.

The company serves several communications markets, including data centers, broadband access networks, cable television, and telecommunications. Its products are designed for applications such as high-speed data transmission, fiber-to-the-home and other broadband deployments, network connectivity, and communications infrastructure.

Founded in 1997 and headquartered in Sugar Land, Texas, Applied Optoelectronics supports customers in multiple regions, including North America, Asia, and other international markets.

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