Applied Optoelectronics (NASDAQ:AAOI) Shares Gap Down - Should You Sell?

Key Points

• AAOI shares opened lower, falling from a prior close of $78.20 to $75.00 before trading around $77.31, with 1.9 million shares changing hands.
• Analyst sentiment is mixed but leans neutral: the stock has a consensus “Hold” rating and an average price target of $147, despite several buy ratings and recent target-price cuts.
• The company exceeded quarterly expectations with $0.06 adjusted EPS and $191.92 million in revenue, up 86.3% year over year, but remains unprofitable with a negative net margin; insiders have also sold about $6.6 million of stock over the past 90 days.

Applied Optoelectronics, Inc. (NASDAQ:AAOI - Get Free Report) gapped down prior to trading on Tuesday. The stock had previously closed at $78.20, but opened at $75.00. Applied Optoelectronics shares last traded at $77.3120, with a volume of 1,917,300 shares changing hands.

Wall Street Analysts Forecast Growth

AAOI has been the topic of a number of recent research reports. B. Riley Financial reduced their price objective on Applied Optoelectronics from $109.00 to $92.00 and set a "neutral" rating on the stock in a research note on Thursday, October 15th. Needham & Company LLC decreased their target price on Applied Optoelectronics from $220.00 to $190.00 and set a "buy" rating for the company in a research report on Friday, August 7th. Raymond James Financial reiterated an "outperform" rating and issued a $178.00 target price on shares of Applied Optoelectronics in a research note on Tuesday, August 11th. Rosenblatt Securities reiterated a "buy" rating and set a $220.00 target price on shares of Applied Optoelectronics in a report on Friday, August 7th. Finally, Wall Street Zen upgraded Applied Optoelectronics from a "sell" rating to a "hold" rating in a report on Saturday, August 8th. Three investment analysts have rated the stock with a Buy rating, two have assigned a Hold rating and one has issued a Sell rating to the company's stock. According to data from MarketBeat.com, the company presently has a consensus rating of "Hold" and an average target price of $147.00.

Applied Optoelectronics Price Performance

The company has a debt-to-equity ratio of 0.12, a quick ratio of 2.13 and a current ratio of 2.78. The business's fifty day simple moving average is $109.30 and its 200 day simple moving average is $133.19. The stock has a market cap of $6.58 billion, a price-to-earnings ratio of -99.68 and a beta of 3.85.

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

Insider Activity at Applied Optoelectronics

In other Applied Optoelectronics news, insider Shu-Hua Yeh sold 6,000 shares of the firm's stock in a transaction that occurred on Monday, October 5th. The stock was sold at an average price of $120.03, for a total transaction of $720,180.00. Following the completion of the sale, the insider owned 371,498 shares in the company, valued at $44,590,904.94. This trade represents a 1.59% decrease in their position. The sale was disclosed in a document filed with the Securities & Exchange Commission, which is available through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, insider Hung-Lun Chang sold 32,172 shares of Applied Optoelectronics stock in a transaction that occurred on Tuesday, September 8th. The stock was sold at an average price of $110.21, for a total value of $3,545,676.12. Following the sale, the insider owned 249,276 shares in the company, valued at $27,472,707.96. This represents a 11.43% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. Over the last 90 days, insiders sold 56,887 shares of company stock valued at $6,581,484. Insiders own 3.80% of the company's stock.

Hedge Funds Weigh In On Applied Optoelectronics

Institutional investors have recently made changes to their positions in the business. Polaris Financial Partners acquired a new stake in shares of Applied Optoelectronics during the third quarter worth approximately $26,000. EFG International AG bought a new stake in shares of Applied Optoelectronics in the second quarter worth $44,000. Persistent Asset Partners Ltd bought a new stake in shares of Applied Optoelectronics in the second quarter worth $47,000. Fiduciary Financial Advisors bought a new stake in shares of Applied Optoelectronics in the second quarter worth $48,000. Finally, Integrated Wealth Concepts LLC bought a new stake in shares of Applied Optoelectronics in the second quarter worth $58,000. 61.70% of the stock is owned by institutional investors and hedge funds.

Applied Optoelectronics Company Profile

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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