Savvy Trades and Investments

[researcher59]

Wade - AAOI reported a GAAP loss of (0.27) for Q3 and adj EPS of (0.05) which was exactly what analysts were estimating. Analyst estimates have been quite accurate for Q2 and Q3. For Q4 the company is guiding for just $65M in revenues, a 4% sequential increase, hardly exciting.

The $300M Microsoft revenue is over several years and will probably ramp up slowly. Maybe $10M in Q1, if that much.

The 40% GM guidance is for their CATV business by Q4 of 2024, not overall. Certainly good news but that business runs in cycles. Revenues go up and down.

Finally, SG&A keeps rising and may trend even higher in 2024, not to mention that they may want to do another capital raise. Their share count has roughly doubled in the past 7 years.

Analyst estimates for adj EPS of $0.50 for 2024 does seem conservative, but a lot depends on how quickly the Microsoft revenue ramps up.

I'd estimate they report adj EPS of just $0.10 for Q1 and $0.15 for Q2.