Applied Optoelectronics Inc (NASDAQ:AAOI) shareholders have a reason to smile today, after the fiber-optic component maker reported solid first-quarter results, even better than implied by its pre-announcement, and its guidance indicates the company is on the right track for growth and elevated margins. AAOI shares are currently trading at $54.62, up $7.81 or 16.69%.
In reaction, Roth Capital analyst Brian Alger boosts his price target for AAOI from $60.00 to $70.00, while reiterating a Buy rating on the stock.
Alger commented, “We believe the Street has become increasingly sensitive to the potential risks to AOI’s business and as a result its growth and profitability is being improperly discounted. With 71% and 230% revenue and EPS growth respectively projected this year, we believe AOI is deeply undervalued.”
“Our and Street numbers are being raised considerably, directly in the face of skeptics’ claims of increasing competition. We don’t dismiss those claims, we simply believe AOI’s profits will grow in spite of the competitive threats,” the analyst added.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Brian Alger has a yearly average return of 25.3% and a 56.7% success rate. Alger has a 108.9% average return when recommending AAOI, and is ranked #164 out of 4561 analysts.
All the 5 analysts polled in the past 12 months rate Applied Optoelectronics Inc stock a Buy. With a return potential of 33.8%, the stock’s consensus target price stands at $72.60.