Applied Optoelectronics (AAOI) Moves 17.8% Higher: Will This Strength Last?

Applied Optoelectronics AAOI shares soared 17.8% in the last trading session to close at $19.77. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 11.5% loss over the past four weeks.

Applied Optoelectronics is benefiting from strong demand in the CATV market, growth in data center business, and increasing production capacity for advanced optical transceivers like 800G and 1.6 terabit products.

This maker of fiber optic products used by cable TV providers is expected to post quarterly loss of $0.08 per share in its upcoming report, which represents a year-over-year change of +71.4%. Revenues are expected to be $104.87 million, up 142.4% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Applied Optoelectronics, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on AAOI going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Applied Optoelectronics belongs to the Zacks Electronics - Semiconductors industry. Another stock from the same industry, Ichor Holdings ICHR, closed the last trading session 0.3% higher at $17.46. Over the past month, ICHR has returned -2.3%.

Ichor Holdings' consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.19. Compared to the company's year-ago EPS, this represents a change of +280%. Ichor Holdings currently boasts a Zacks Rank of #3 (Hold).

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This article originally published on Zacks Investment Research (zacks.com).

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