This Research Report Sent Shares Of Applied Optoelectronics Lower

Shares of Applied Optoelectronics Inc AAOI fell more than 3 percent Wednesday morning after analysts at BWS Financial released a cautious research report.

Applied Optoelectronics held an investor conference call and detailed its manufacturing efficiencies, but BWS Financial's Hamed Khorsand believes management's commentary during the Q&A portion of the call "should scare bulls" for three reasons.

First, the company is facing price erosion at an "accelerated rate," which implies that future earnings reports will "continue trending down," the analyst explained.

Second, management's commentary concerning gross margins and pricing trends gives the analyst's thesis "further credence."

Finally, during Applied Optoelectronics second-quarter conference call management was willing to detail its relationship with its top three data center customers. But during Tuesday's conference call management had a "different tone by walking way from such past commentary" and stated it can't comment on specific customer relationships.

"We would not be surprised to see positive competing commentary to surface based upon management's presentation," the analyst added. "We would suggest investors to listen to the replay themselves and hear the data points that we have highlighted in this note and make their own assessment."

The company's investor relations webpage can be accessed here.

At last check, shares of Applied Optoelectronics were down 4.82 percent at $64.89.

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