Shares of Applied Optoelectronics Inc (NASDAQ:AAOI) were recovering on Tuesday, after last week’s steep decline.
The company’s sales are poised to explode from mid-2024 onwards, “driven by AI 400+G Optical interconnects for Data Centers and DOCSIS 4.0 amplifiers for Cable networks,” according to Rosenblatt Securities.
The Applied Optoelectronics Analyst: Mike Genovese initiated coverage of Applied Optoelectronics with a Buy rating and a price target of $23.
The Applied Optoelectronics Thesis: The AI 800+G Optical transceiver market is projected to reach $7.5 billion in 2025, with the total high-speed Datacom transceiver market valued at around $12 billion, Genovese said in the initiation note.
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“AAOI could potentially capture 10+% share of the total, suggesting our $485mn revenue forecast for 2025 may be conservative despite the 40% growth rate,” the analyst wrote.
Applied Optoelectronics’ gross margins expanded by more than 1,000 basis points to around 30% in 2023 and could continue to expand in 2024 and 2025, Genovese stated. “Our $1.15 EPS forecast for 2025 is 23% above consensus, and there is potential for upside to our number,” he added.
AAOI Price Action: Shares of Applied Optoelectronics were up 8.2% to $17.36 at the time of publication Tuesday.
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