Shareholders will be ecstatic, with their stake up 65% over the past week following Applied Optoelectronics, Inc.'s (NASDAQ:AAOI) latest quarterly results. Revenues of US$65m beat expectations by a respectable 3.8%, although statutory losses per share increased. Applied Optoelectronics lost US$0.42, which was 35% more than what the analysts had included in their models. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Applied Optoelectronics

Taking into account the latest results, the consensus forecast from Applied Optoelectronics' four analysts is for revenues of US$510.4m in 2025. This reflects a major 144% improvement in revenue compared to the last 12 months. Earnings are expected to improve, with Applied Optoelectronics forecast to report a statutory profit of US$0.53 per share. Before this earnings report, the analysts had been forecasting revenues of US$438.3m and earnings per share (EPS) of US$0.22 in 2025. So we can see there's been a pretty clear increase in sentiment following the latest results, with both revenues and earnings per share receiving a decent lift in the latest estimates.

It will come as no surprise to learn that the analysts have increased their price target for Applied Optoelectronics 40% to US$22.38on the back of these upgrades. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Applied Optoelectronics, with the most bullish analyst valuing it at US$27.50 and the most bearish at US$14.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Applied Optoelectronics' growth to accelerate, with the forecast 104% annualised growth to the end of 2025 ranking favourably alongside historical growth of 0.7% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 7.7% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Applied Optoelectronics is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Applied Optoelectronics' earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Applied Optoelectronics going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Applied Optoelectronics (1 is concerning) you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.