Applied Optoelectronics (NASDAQ:AAOI) Shares Gap Up - Time to Buy?

Key Points

• AAOI shares gapped higher, opening at $80.00 versus a prior close of $75.57, but later traded near $76.02.
• Analyst sentiment is mixed: three analysts rate the stock Buy, two Hold, and one Sell, resulting in a consensus Hold rating and an average price target of $147.
• Applied Optoelectronics exceeded quarterly earnings and revenue expectations, with EPS of $0.06 and revenue up 86.3% year over year, although the company still reported negative margins and return on equity.

Applied Optoelectronics, Inc. (NASDAQ:AAOI - Get Free Report)'s stock price gapped up before the market opened on Monday. The stock had previously closed at $75.57, but opened at $80.00. Applied Optoelectronics shares last traded at $76.0240, with a volume of 2,458,802 shares.

Wall Street Analyst Weigh In

Several research analysts have recently weighed in on the company. Raymond James Financial restated an "outperform" rating and set a $178.00 target price on shares of Applied Optoelectronics in a report on Tuesday, August 11th. Wall Street Zen upgraded shares of Applied Optoelectronics from a "sell" rating to a "hold" rating in a report on Saturday, August 8th. Needham & Company LLC reduced their price target on shares of Applied Optoelectronics from $220.00 to $190.00 and set a "buy" rating on the stock in a research report on Friday, August 7th. Rosenblatt Securities reiterated a "buy" rating and issued a $220.00 target price on shares of Applied Optoelectronics in a report on Friday, August 7th. Finally, Weiss Ratings downgraded shares of Applied Optoelectronics from a "sell (d-)" rating to a "sell (e+)" rating in a research report on Monday, August 17th. Three analysts have rated the stock with a Buy rating, two have issued a Hold rating and one has assigned a Sell rating to the company's stock. According to MarketBeat.com, Applied Optoelectronics has a consensus rating of "Hold" and an average target price of $147.00.

Applied Optoelectronics Stock Performance

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 stock has a fifty day moving average price of $110.39 and a 200-day moving average price of $133.24. The firm has a market cap of $6.59 billion, a price-to-earnings ratio of -99.66 and a beta of 3.85.

Applied Optoelectronics (NASDAQ:AAOI - Get Free Report) last issued its 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. Applied Optoelectronics had a negative return on equity of 1.98% and a negative net margin of 9.57%. The business had revenue of $191.92 million during the quarter, compared to the consensus estimate of $190.48 million. During the same period in the prior year, the business posted ($0.16) EPS. The company's revenue for the quarter was up 86.3% on a year-over-year basis. Applied Optoelectronics has set its Q3 2026 guidance at 0.110-0.260 EPS. On average, analysts expect that Applied Optoelectronics, Inc. will post 0.55 earnings per share for the current fiscal year.

Insider Activity at Applied Optoelectronics

In related news, insider Shu-Hua Yeh sold 6,000 shares of the business's stock in a transaction dated Monday, October 5th. The shares were sold at an average price of $120.03, for a total value of $720,180.00. Following the completion of the transaction, the insider owned 371,498 shares of the company's stock, valued at approximately $44,590,904.94. The trade was a 1.59% decrease in their position. The sale was disclosed in a document filed with the SEC, which can be accessed through 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 Monday, October 12th. The stock was sold at an average price of $102.87, for a total transaction of $411,480.00. Following the completion of the sale, the chief financial officer directly owned 363,168 shares of the company's stock, valued at $37,359,092.16. The trade was a 1.09% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders have sold a total of 58,172 shares of company stock valued at $6,735,709 over the last quarter. Insiders own 3.80% of the company's stock.

Institutional Inflows and Outflows

Hedge funds have recently added to or reduced their stakes in the stock. BlackRock Inc. acquired a new position in Applied Optoelectronics during the 2nd quarter valued at approximately $955,672,000. Renaissance Technologies LLC acquired a new stake in shares of Applied Optoelectronics in the first quarter valued at $47,817,000. William Blair Investment Management LLC bought a new position in shares of Applied Optoelectronics during the 2nd quarter valued at about $74,703,000. Bank of America Corp DE bought a new position in shares of Applied Optoelectronics in the second quarter valued at $33,712,000. Finally, Bank of New York Mellon Corp purchased a new stake in shares of Applied Optoelectronics during the second quarter valued at $32,567,000. 61.70% of the stock is owned by hedge funds and other 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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