Roth Capital Bullish on Applied Optoelectronics Inc (AAOI) Amid Positive Earnings Pre-Announcement

After market close yesterday, Applied Optoelectronics Inc (NASDAQ:AAOI) made clear its expectation to post vastly improved results for the September quarter. Management has boosted guidance that now indicates an 11.3% upturn on the top line along with a 48.6% increase on non-GAAP EPS guidance estimates.

In reaction, Roth Capital analyst Brian Alger reiterates a Buy rating on AAOI, while raising the price target to $23, which represents a nearly 14% increase from where the shares last closed. Additionally, Alger has increased EPS estimates on back of the announcement.

“In its pre-announcement, AAOI specifically identified datacenter customers as driving upside in the quarter, however our contacts indicate the CATV business also continues to improve, although not with the magnitude of the Datacenter business. We expect to gain further clarity on the datacenter business at our conference Wednesday,” he notes.

Alger concludes, “Given the recent hyperscale customer announcement and Tuesday’s preannouncement we are convinced that AAOI has more than recovered from its Q1 set back. With increased investment and capacity, we see continuing upside for the company over the next several quarter.”

According to TipRanks, which measures analysts’ and bloggers’ success rates based on how their calls perform, analyst Brian Alger is ranked #551 out of 4,147 analysts. Alger has a 63% success rate and yields 9.5% in his annual returns. When recommending AAOI, Alger garners 53.2% in average profits on the stock.

TipRanks analytics indicate AAOI as a Strong Buy. 100% of analysts polled in the last 3 months rate a Buy on AAOI. The consensus price target stands at $23.33, marking just under a 14% upside from where the stock is currently trading.Screen Shot 09-07-16 at 05.44 PM


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