Rosenblatt Starts Applied Optoelectronics (AAOI) at Sell

Rosenblatt initiates coverage on Applied Optoelectronics (NASDAQ: AAOI) with a Sell rating and a price target of $30.00.

Analyst Jun Zhang cited their view that the pricing wars will most likely continue to depress gross margins throughout the rest of the year and into 2019

Zhang commented, "We believe demand in both the Chinese and U.S. hyperscale markets will continue to grow over the next two years but expect increasing price competition in the 100G and 400G module markets. AAOI should benefit from increased volume growth, but we have concerns that 40% gross margins are unrealistic going forward. Pricing competition will most likely depress gross margins, and we do not believe this is reflected in current consensus EPS numbers. We are forecasting $1.95 EPS for FY2019 and a $30 price target, based on 15x FY2019 earnings."

For an analyst ratings summary and ratings history on Applied Optoelectronics click here. For more ratings news on Applied Optoelectronics click here.

Shares of Applied Optoelectronics closed at $45.36 yesterday.

You May Also Be Interested In

• UBS Downgrades Grand Korea Leisure (114090:KS) to Neutral
• Freedom Broker Starts AngloGold Ashanti (AU) at Buy
• Bernstein SocGen Group Resumes Thermo Fisher Scientific (TMO) at Market Perform