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Why Applied Optoelectronics, Inc. Stock Rose 14% Higher Today

By Anders Bylund – May 31, 2018 at 2:24PM

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An analyst left the optical networking specialist's investor presentation convinced that AOI is returning to higher shipping volumes in the second half of 2018.

What happened

Shares of Applied Optoelectronics (AAOI 0.73%) are on the rise today thanks to a bullish analyst note. The maker of optical networking components and modules saw its stock price jump as much as 14% higher, backing down to a 13.1% gain as of 2:50 p.m. EDT.

So what

Analyst firm DA Davidson reiterated its buy rating and $50 price target on AOI shares today. Analyst Mark Kelleher had attended an investor conference where CFO Stefan Murry gave a presentation, and Kelleher left that event impressed with AOI's competitive advantages.

Close-up shot of a fiber-optic transceiver and two optical cables.

Image source: Getty Images.

Now what

Murry said that AOI hopes to double its volume of optical transceiver shipments in the second half of 2018, as compared to the first two quarters. Shipping volumes should then double again in 2019. Kelleher believes that AOI can deliver on these ambitious goals thanks to the company's 20-year efforts at perfecting the transceiver manufacturing process, resulting in custom-made machinery for key steps in the component-building process.

After today's jump, AOI shares are back to prices not seen since October and 104% above the stock's yearly lows. The rosy volume forecasts give investors hope that the stalled data center orders of recent quarters could now be a thing of the past.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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