Applied Optoelectronics Inc’s (NASDAQ: AAOI) business is stable at its two key customers, which contribute around 60% of overall revenue, according to Rosenblatt Securities. Yet the company’s revenue growth potential from new wins appears limited in the near term, an analyst at the firm said after the company's first-quarter report.
The Applied Optoelectronics Analyst
Ryan Koontz downgraded the rating for Applied Optoelectronics from Buy to Neutral and lowered the price target from $11.50 to $10.
The Applied Optoelectronics Thesis
There is uncertainty around new wins for Applied Optoelectronics in 200G and 400G transceiver portfolios, Koontz said in a Thursday downgrade note. (See his track record here.)
The company reported a 23.2% year-on-year decline in its first-quarter revenue to $40.5 million, missing the consensus estimate. Earnings also declined in the quarter to 44 cents per share, missing the consensus estimates by 7 cents per share.
Applied Optoelectronics said that revenue of $3.8 million had been pushed out of the first quarter and into the second and issued its revenue guidance at $57.5 million, ahead of the consensus estimate. The earnings guidance of a 24-cent-per-share loss missed expectations.
Rosenblatt reduced the earnings estimates for fiscal 2020 and 2021 from a 48-cent-per-share loss to negative $1.09 and from positive 30 cents per share to negative 44 cents per share, respectively.
AAOI Price Action
Shares of Applied Optoelectronics were down 12.38% at $10.69 at the time of publication Friday.