B. Riley analyst Dave Kang upgraded Applied Optoelectronics (AAOI) to Buy from Neutral with a price target of $11.50, up from $2.50, post the Q2 results. The analyst cites the ramp of 400G, the company’s supply agreement with Microsoft (MSFT) that could be worth $300M over the next three years, CATV bottoming, and the potential for significant margin expansion to improve profitability for the upgrade. Management believes the 100G strength will last for several quarters while 400G will continue to grow, the analyst tells investors in a research note. Riley believes the stock still has more upside.
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