Needham Gives Applied Optoelectronics a Strong Buy Rating

May 22, 2017: Needham initiates coverage of Applied Optoelectronics with a Strong Buy rating and a price target of $85. Needham says that they see substantial upside to Applied Optoelectronics’ revenue forecasts, gross margin estimates, and valuation. Needham thinks Applied Optoelectronics will beat Street estimates as the industry rolls through the steep ramp phase of the Data Comm upgrade to 25G/100G. Needham thinks Applied Optoelectronics is the market share leader and lower cost supplier. Needham expects strong demand growth during the next several years as the Web 2.0 Big Data, Social Media and IaaS companies drive efficiencies through their current and new scaled-out Data Center footprints.

April 20, 2017: Applied Optoelectronics Inc. will replace Adeptus Health Inc. in the S&P SmallCap 600, effective prior to the open on Tuesday, April 25. Adeptus Health has filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code to pursue a plan of reorganization and has been halted by the NYSE effective before the market open today.

April 18, 2017: Hearing takeover rumors circulating about Applied Optoelectronics. The rumor is that Cisco Systems could be interested in acquiring the company. Could not find a credible source for the rumor.

April 10, 2017: Sell Applied Optoelectronics for a big 58% win and congrats if you made money on the trade.

March 6, 2017: Applied Optoelectronics announced the development of Electro-absorption Modulated Lasers (EMLs) operating at a data rate of 10 Gigabits per second (Gbps).

Applied Optoelectronics’ 10 Gbps EMLs are designed specifically for 10GBASE-ZR Ethernet and cable TV (CATV) Remote PHY connectivity to enable deployment of the next-generation FTTH, telecom, and CATV networks. The lasers are available at wavelengths spanning the ITU-T C-band dense wavelength division multiplexing (DWDM) grid and are able to support fiber transmission distances up to 80km. They also feature a high laser chip operating temperature up to 55oC, enabling commercial and industrial operating temperature ranges for transceivers.

February 24, 2017: Applied Optoelectronics reports Q4 EPS of $0.84 versus the $0.69 estimate. Revenue also beat coming in at $84.9 million versus the $82.7 million estimate.

The CEO Dr. Lin said, “Our ability to internally manufacture lasers and light engines provides us with cost-leadership advantages, a faster time to market, and the ability to quickly scale to demand. Looking ahead, as the 100G transition accelerates this year, we see the opportunity to build on our momentum and expand our market leadership.”

February 22, 2017: Applied Optoelectronics announced the immediate availability of 100G QSFP28 10km transceivers based on the 4WDM-10 MSA specification.

The new product family supports hyperscale datacenters, datacenter interconnects, and backhaul applications for metro and mobile networks. The modules consume less than 3.5W of power and support 100Gbps transmission over 10km duplex single-mode fiber. The modules are based on the same CWDM wavelength grid as existing 100G QSFP28 CWDM4 2km modules, and are interoperable with CWDM4-compliant modules up to 2km. The transceivers leverage AOI’s industry-leading manufacturing capacity and vertical integration, with in-house 25G laser diodes, light engine packaging, and module production.

The new modules are important to hyperscale datacenter operators who need solutions to extend interconnect distances beyond 2km, a realm that had previously been served by more expensive solutions relying on coherent optics or other specialized designs. By enabling longer distances while still being interoperable with shorter distance modules, this solution reduces cost and simplifies network planning.

January 15, 2017: Roth Capital raised the price target of Applied Optoelectronics to $34 from $30. Roth Capital also reiterated a Buy rating on Applied Optoelectronics. Roth Capital says that Applied Optoelectronics is extremely well positioned to take advantage of the transition from copper to optical interconnect inside the datacenter. Roth Capital believes this quarter’s outperformance validates that thesis and likely indicates that new hyperscale customers have been added. Given the macro tailwinds, as well as the strategic positioning, Roth continues to believe a 20x 2017 multiple is warranted. Thus, with their FY:17 forecast rising to $1.71.

January 11, 2017: Applied Optoelectronics reports preliminary Q4 EPS of $0.77 to $0.82 versus the $0.50 estimate. Revenue will come in between $84.5 million to $84.8 million versus the $77.4 million estimate.

Dr. Thompson Lin, Applied Optoelectronics President and CEO said, “Accelerated demand for our market-leading datacenter products and increased capacity fueled our results. Additionally, we continued to drive manufacturing efficiencies, which contributed to a record gross margin. We are excited by the good close to the year and look forward to sharing the additional details of our fourth quarter performance on our conference call in February.”

Applied Optoelectronics, Inc. is a leading developer and manufacturer of advanced optical products, including components, modules and equipment. AOI’s products are the building blocks for broadband fiber access networks around the world, where they are used in the internet datacenter, CATV broadband and fiber-to-the-home markets. Applied Optoelectronics supplies optical networking lasers, components and equipment to tier-1 customers in all three of these markets.