Rosenblatt has adjusted its price target for Applied Optoelectronics (AAOI, Financial) upwards, raising it from $30 to $34, while maintaining a Buy rating on the stock. The firm expresses optimism about the company's prospects for 2026, particularly regarding the potential for improved gross and operating margins compared to current consensus expectations. However, there is some uncertainty about reaching the fiscal third quarter 2025 revenue guidance of $120 million, due to still-limited volumes in the 400G and 800G segments.
Despite this uncertainty, the firm suggests that investors might overlook any shortfall in the Q3 revenue guidance, focusing instead on the positive forecast for 2026. This forward-looking sentiment suggests that, even with temporary setbacks, the longer-term outlook remains strong, potentially driving continued interest in AAOI shares.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 5 analysts, the average target price for Applied Optoelectronics Inc (AAOI, Financial) is $30.40 with a high estimate of $50.00 and a low estimate of $13.00. The average target implies an upside of 15.90% from the current price of $26.23. More detailed estimate data can be found on the Applied Optoelectronics Inc (AAOI) Forecast page.
Based on the consensus recommendation from 5 brokerage firms, Applied Optoelectronics Inc's (AAOI, Financial) average brokerage recommendation is currently 2.2, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Applied Optoelectronics Inc (AAOI, Financial) in one year is $17.75, suggesting a downside of 32.33% from the current price of $26.23. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Applied Optoelectronics Inc (AAOI) Summary page.
AAOI Key Business Developments
Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Applied Optoelectronics Inc (AAOI, Financial) achieved the highest quarterly CATV revenue in its history during Q1 2025.
- The company reported a significant year-over-year revenue increase, more than doubling compared to Q1 of the previous year.
- Gross margin expanded by over 1,000 basis points year-over-year, indicating improved profitability.
- The company is on track to expand production capacity for 800G and higher transceivers, with plans to produce over 200,000 pieces per month by mid-2026.
- Positive feedback was received from customers regarding the company's plans for domestic production, enhancing supply chain security and customer confidence.
Negative Points
- Sequential revenue decline in the data center segment due to seasonality and inventory digestion from a major customer.
- Non-GAAP net loss for Q1 was $0.9 million, indicating ongoing financial challenges.
- The company anticipates a modest pullback in CATV revenue in Q2 due to production retooling.
- Supply constraints affected the ability to meet increased demand for certain 100G products, impacting revenue potential.
- The company faces ongoing risks related to tariffs, which could impact future financial performance and operational costs.
