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Investing.com - Citi has raised its price target on Eoptolink Technology (300502:CH) to RMB198.00 from RMB127.85 while maintaining a Buy rating following the company’s stronger-than-expected second-quarter earnings.
The Chinese optical component manufacturer announced guidance for first-half 2025 net profit of approximately RMB3.7 billion to RMB4.2 billion, implying second-quarter net profit growth of 294%-386% year-over-year to RMB2.1 billion-RMB2.6 billion.
The midpoint of Eoptolink’s second-quarter guidance represents a 340% year-over-year increase to RMB2.4 billion, exceeding Citi’s expectations by 29% and consensus estimates by 42%, according to the research firm.
Citi attributes the strong performance to better product mix and robust high-speed transceiver demand, specifically highlighting higher 800G shipment mix and margin expansion from key customers like Amazon (NASDAQ:AMZN), as well as revenue and margin improvements from ramping 1.6T products.
The firm has increased its FY25-27E earnings estimates by 29-40% and raised its target price multiple to 20x FY25E PE from 18x previously, maintaining Eoptolink as a top pick.
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