Applied Optoelectronics (NASDAQ:AAOI) Shares Gap Up - Still a Buy?

Key Points

• AAOI shares jumped 6%, opening at $113 after previously closing at $105.90, but later traded near $110.53.
• Analyst sentiment remains mixed: the stock has an overall “Hold” rating and a consensus price target of $139.40, with targets ranging from $190 to $220 among bullish analysts.
• Applied Optoelectronics exceeded quarterly expectations, reporting $0.06 EPS and $191.92 million in revenue, up 86.3% year over year; however, it still posted a negative net margin and return on equity, while insiders sold more than $6.3 million of shares over the past 90 days.

Applied Optoelectronics, Inc. (NASDAQ:AAOI - Get Free Report)'s share price gapped up prior to trading on Friday. The stock had previously closed at $105.90, but opened at $113.00. Applied Optoelectronics shares last traded at $110.5320, with a volume of 4,881,821 shares traded.

Analysts Set New Price Targets

A number of research analysts recently issued reports on AAOI shares. B. Riley Financial reiterated a "neutral" rating on shares of Applied Optoelectronics in a report on Friday, August 7th. Wall Street Zen raised Applied Optoelectronics from a "sell" rating to a "hold" rating in a research report on Saturday, August 8th. Weiss Ratings downgraded shares of Applied Optoelectronics from a "sell (d-)" rating to a "sell (e+)" rating in a report on Monday, August 17th. Needham & Company LLC dropped their target price on Applied Optoelectronics from $220.00 to $190.00 and set a "buy" rating for the company in a report on Friday, August 7th. Finally, Rosenblatt Securities reiterated a "buy" rating and set a $220.00 target price on shares of Applied Optoelectronics in a research report on Friday, August 7th. Three analysts have rated the stock with a Buy rating, two have given a Hold rating and one has issued a Sell rating to the stock. Based on data from MarketBeat.com, the company has an average rating of "Hold" and a consensus price target of $139.40.

Applied Optoelectronics Trading Up 6.0%

The company has a quick ratio of 2.13, a current ratio of 2.78 and a debt-to-equity ratio of 0.12. The firm's 50-day moving average price is $113.81 and its 200 day moving average price is $133.60. The company has a market capitalization of $9.50 billion, a P/E ratio of -144.77 and a beta of 3.85.

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

Insider Transactions at Applied Optoelectronics

In other Applied Optoelectronics news, insider Shu-Hua Yeh sold 6,000 shares of the firm's stock in a transaction dated Monday, October 5th. The stock was sold at an average price of $120.03, for a total transaction of $720,180.00. Following 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 ownership of the stock. The transaction was disclosed in a document filed with the SEC, which is available at this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CFO Stefan Murry sold 4,000 shares of Applied Optoelectronics stock in a transaction that occurred on Thursday, September 10th. The stock was sold at an average price of $105.33, for a total value of $421,320.00. Following the completion of the transaction, the chief financial officer directly owned 367,168 shares in the company, valued at $38,673,805.44. This trade represents a 1.08% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. In the last ninety days, insiders sold 54,172 shares of company stock valued at $6,324,229. Insiders own 3.80% of the company's stock.

Institutional Inflows and Outflows

Hedge funds and other institutional investors have recently made changes to their positions in the company. GAMMA Investing LLC increased its position in Applied Optoelectronics by 32.9% during the third quarter. GAMMA Investing LLC now owns 2,475 shares of the semiconductor company's stock valued at $246,000 after acquiring an additional 613 shares during the last quarter. Farther Finance Advisors LLC increased its holdings in shares of Applied Optoelectronics by 46.6% in the third quarter. Farther Finance Advisors LLC now owns 1,051 shares of the semiconductor company's stock worth $104,000 after purchasing an additional 334 shares during the last quarter. Venture Visionary Partners LLC boosted its position in shares of Applied Optoelectronics by 61.2% during the 3rd quarter. Venture Visionary Partners LLC now owns 3,759 shares of the semiconductor company's stock valued at $373,000 after acquiring an additional 1,427 shares during the last quarter. Polaris Financial Partners purchased a new position in shares of Applied Optoelectronics in the 3rd quarter worth $26,000. Finally, Silicon Valley Capital Partners purchased a new stake in shares of Applied Optoelectronics during the 2nd quarter valued at about $444,000. Institutional investors own 61.70% of the company's stock.

About Applied Optoelectronics

Applied Optoelectronics, Inc NASDAQ: AAOI develops and manufactures fiber-optic networking products used to transmit data across broadband, data center, telecommunications and wireless networks. Its portfolio includes optical transceivers, modules, lasers, components and networking equipment designed for high-speed communications infrastructure.

The company serves communications service providers, cable television and broadband operators, internet content providers, data center operators and telecommunications customers.

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