Applied Optoelectronics Remains Under Pressure After Last Week’s Q4 Guidance Miss

Applied Optoelectronics, Inc. (NASDAQ:AAOI) shares traded lower Tuesday as investors continued to reprice the stock following its Nov. 5 earnings report, which included fourth-quarter revenue guidance below estimates.

The post-earnings pressure has been reinforced by a series of analyst price cuts from B. Riley Securities, Rosenblatt and Needham, even as the latter two firms maintained Buy ratings.

The broader market also leaned risk-off, with the Technology sector and S&P 500 both down 0.3%.

• Applied Optoelectronics stock is taking a hit today. What’s pressuring AAOI stock?

Q4 Guidance Overshadows Q3 Beat

Applied Optoelectronics reported third-quarter revenue of $269.88 million and adjusted EPS of 17 cents, topping estimates of $268.11 million and 14 cents, respectively.

The focus shifted to fourth-quarter guidance. Applied Optoelectronics expects adjusted EPS of 48 cents to 63 cents versus the 56-cent estimate.

Revenue guidance of $385 million to $420 million compares with the $427.26 million estimate.

Gross margin improved to 28.2% from 27.7% in the second quarter. CEO Thompson Lin said the company has made "meaningful progress" scaling 800G and 1.6T manufacturing to meet AI-related optical demand.

Analysts Reset Expectations After Earnings

Analysts lowered price forecasts after the report, though they maintained two Buy ratings and one Neutral rating.

B. Riley Securities kept a Neutral rating while cutting its price target to $45 from $92; Rosenblatt maintained a Buy rating but lowered its price target to $115 from $220, while Needham reiterated a Buy rating and reduced its price tagret to $100 from $170.

The stock carries an Outperform consensus rating, with an average consensus price target.

AAOI Technical Setup Remains Bearish

Applied Optoelectronics remains in a bearish technical setup, trading 29.4% below its 20-day SMA, 45.3% below its 50-day SMA, and 56.2% below its 200-day SMA.

RSI stands at 31.80, putting the stock near oversold territory, though momentum remains weak. MACD is below its signal line, reinforcing near-term bearish pressure.

Key support sits at $41, while resistance is near $51. A hold above support could stabilize the stock, while a break below may expose further downside.

Despite the recent weakness, AAOI has gained 86.43% over the past 12 months.

AAOI Price Action: Applied Optoelectronics shares were down 8.87% at $47.48 at the time of publication on Tuesday, according to Benzinga Pro data.

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