Applied Optoelectronics (NASDAQ:AAOI) Shares Down 7.9% - Should You Sell?

Applied Optoelectronics, Inc. (NASDAQ:AAOI) experienced a significant decline of 7.9% during trading on Monday. The stock reached a low of $20.34 and concluded trading at $20.14. A total of 1,934,504 shares changed hands, marking a 46% decrease from the average trading volume of 3,550,115 shares. Previously, the stock had closed at $21.86.

Wall Street Analyst Opinions

Analysts from various financial institutions have shared their perspectives on AAOI. StockNews.com has upgraded Applied Optoelectronics to a “sell” rating in a note published on February 26th. In contrast, Northland Securities maintained an “outperform” rating with a revised price target of $40.00, up from $25.00, in a report dated December 18th. B. Riley adjusted their stance, lowering their rating from “neutral” to “sell” and setting a price objective of $14.00 on December 10th. Additionally, Raymond James raised their target price for the stock to $31.00 and assigned it a “buy” rating. Lastly, Rosenblatt Securities reaffirmed their “buy” rating and set a price target of $44.00 on February 24th. Currently, two analysts have issued sell ratings while one holds, and three recommend buy ratings, leading to a consensus rating of “Hold” and a price target average of $27.60 according to MarketBeat.com.

Stock Performance and Financial Metrics

In the wake of recent news, Applied Optoelectronics stock has fallen by 18.9%. This decline has raised questions about whether the recent partnership with Microsoft has stimulated a massive gain of 300% in stock value. The company holds a debt-to-equity ratio of 0.36, a current ratio of 1.61, and a quick ratio of 1.06. Its market capitalization currently stands at $830.50 million, with a price-to-earnings ratio of -8.60 and a beta of 2.36. Furthermore, the company's 50-day simple moving average is at $30.33, while its two-hundred day simple moving average is $24.24.

Applied Optoelectronics reported its quarterly earnings data on February 26th, showing an earnings per share (EPS) of ($0.09), which fell short of the consensus estimate of ($0.02) by ($0.07). The company’s revenue for the quarter amounted to $100.27 million, slightly exceeding analysts’ expectations of $99.92 million. It is important to note that Applied Optoelectronics operates with a negative net margin of 38.61% and a negative return on equity of 22.36%. Analysts predict that the company will report an EPS of -1.18 for the current fiscal year.

Insider Activity

In other developments, Chief Financial Officer Stefan J. Murry sold 2,298 shares of the company's stock on January 21st at an average price of $35.17, totaling $80,820.66. Following this sale, he retains ownership of 209,831 shares valued at approximately $7,379,756.27, representing a 1.08% decrease in his holdings. Furthermore, Director Richard B. Black sold 10,000 shares on January 15th at an average price of $29.00, resulting in a sale valued at $290,000. This decreased his ownership by 5.96%, leaving him with 157,813 shares valued at around $4,576,577. Over the last quarter, insiders sold 36,298 shares worth a total of $1,281,201, and insiders maintain a 5.40% ownership stake in the company.

Institutional Investments

Several hedge funds and institutional investors have recently altered their holdings in Applied Optoelectronics. Westfield Capital Management Co. LP has acquired a new stake worth approximately $19,019,000 during the third quarter. Similarly, Whale Rock Capital Management LLC invested about $16,145,000, while Nomura Holdings Inc. secured a position valued at approximately $31,331,000 in the fourth quarter. Yong Rong HK Asset Management Ltd and Jefferies Financial Group Inc. also purchased new stakes in the company worth about $27,645,000 and $23,354,000, respectively. Currently, institutional investors own 61.72% of the company's shares.

Company Overview

Applied Optoelectronics, Inc. is engaged in the design, manufacture, and sale of fiber-optic networking products. The company operates primarily in the United States, Taiwan, and China, providing a variety of products including optical modules, filters, lasers, laser components, and networking equipment.

Final Thoughts

Investors may find themselves questioning the potential value of Applied Optoelectronics amid recent changes in stock performance and analyst ratings. As stock movements and evaluations evolve, it may be wise for investors to stay informed and consider alternative investment opportunities.

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