Market Overview

Applied Optoelectronics: How Amazon, Facebook And Microsoft Will Impact Its Q1 Earnings

Share:
Applied Optoelectronics: How Amazon, Facebook And Microsoft Will Impact Its Q1 Earnings
Related AAOI
DA Davidson: Near-Term Applied Optoelectronics Outlook Blurred By Inventory Congestion, China Weakness
Benzinga's Top Upgrades, Downgrades For February 22, 2019
KHC, DBX and STMP among premarket losers (Seeking Alpha)
Related FB
DA Davidson: Near-Term Applied Optoelectronics Outlook Blurred By Inventory Congestion, China Weakness
A Chat With Chris Boudreau, CEO Of Cannabis Courier Driven Deliveries
The 'Link Tax' In The EU Will Seriously Hurt Google And Facebook's Profit Margins (Seeking Alpha)

Applied Optoelectronics Inc (NASDAQ: AAOI) is scheduled to report first-quarter results after Tuesday's market close and is expected to show investors it remains well-positioned to benefit from the "growing dynamic of hyperscale data centers," according to D.A. Davidson. 

The Analyst

Analyst Mark Kelleher maintains a Buy rating on Applied Optoelectronics' stock with a 12-18-month price target lowered from $55 to $50. 

The Thesis

Applied Optoelectronics is expected to report revenue of around $69 million in Q1, with the "usual suspects" of Amazon.com, Inc. (NASDAQ: AMZN), Facebook, Inc. (NASDAQ: FB) and Microsoft Corporation (NASDAQ: MSFT) combining for more than 70 percent of total revenue, Kelleher said in a Monday note. (See the analyst's track record here.) 

Encouragingly, the company's supply agreement with Facebook is for a minimum commitment in 2018 of $125 million, Kelleher said. The agreement is related to just one product, so the possibility of the social media giant increasing its spending represents a "significant incremental positive," he said. 

Applied Optoelectronics is projected to report a gross margin rate of around 40-41 percent in Q1 and earn around 30 cents per share, the analyst said. 100G products are expected to continue in an ongoing trend of accounting for a higher percentage of total revenue, he said. 

Beyond Tuesday's print, the company's future earnings reports should show top-and-bottom-line growth as its inventory adjusts, Kelleher said. 

Price Action

Applied Optoelectronics shares were trading up 5.3 percent Monday afternoon at $33.53. 

Related Links:

Tellurian, Applied Optoelectronics Capture Short Sellers' Attention

Optical Stocks Under Pressure After US Bans Sales To ZTE

Latest Ratings for AAOI

DateFirmActionFromTo
Feb 2019DA DavidsonDowngradesBuyNeutral
Feb 2019Raymond JamesDowngradesOutperformMarket Perform
Nov 2018B. Riley FBRMaintainsNeutralNeutral

View More Analyst Ratings for AAOI
View the Latest Analyst Ratings

Posted-In: DA Davidson Hyperscale Data Centers Mark Kelleher opticalAnalyst Color Price Target Reiteration Analyst Ratings Best of Benzinga

 

Related Articles (AMZN + AAOI)

View Comments and Join the Discussion!

Utility NiSource Added To Goldman Sachs' America's Conviction Buy List: 'One Of Our Top Ideas'

4 Stocks That Appear To Have Just Started Downtrends