Key Takeaways:
- Goldman Sachs raised Eoptolink's target 5.4% to 633 yuan, maintaining Buy.
- Q2 net profit midpoint of 5.2 billion yuan beat estimates by 44%.
- 800G and 1.6T optical module shipments are accelerating on AI demand.
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Eoptolink has 31% upside as Goldman raises target to 633 yuan
Goldman Sachs raised its price target on Eoptolink Technology by 5.4% to 633 yuan after second-quarter profit guidance beat estimates by 44%.
"AI capital expenditure expansion and the shift to high-speed optical modules are driving stronger-than-expected earnings," Goldman Sachs said in a July 20 report.
Eoptolink forecast first-half net profit of 7.0 billion to 8.0 billion yuan, implying second-quarter profit of 4.2 billion to 6.2 billion yuan — up 78% to 163% from a year earlier. The midpoint of 5.2 billion yuan exceeded consensus by 44%, Goldman said. The bank raised its 2026, 2027 and 2028 earnings forecasts by 7%, 2% and 2% respectively.
The upgrade reflects the AI infrastructure spending boom driving demand for high-speed optical modules used in data centers. Eoptolink's 800G and 1.6T products are ramping as chip supply improves and capacity expands, with silicon photonics penetration expected to increase through the second half. Goldman's 633 yuan target implies 31% upside from the July 17 close of 482.88 yuan.
Goldman now expects Eoptolink to report 2026 revenue of 51.5 billion yuan and net profit of 20.7 billion yuan. For 2027, the bank forecasts revenue of 73.9 billion yuan and net profit of 30.1 billion yuan, and for 2028, revenue of 85.0 billion yuan and net profit of 34.6 billion yuan.
The bank applied a 29.3 times price-to-earnings multiple to its 2027 earnings estimate, up from 28.4 times previously, to derive the new target. That multiple is broadly in line with Eoptolink's historical average forward P/E of 28 times since September 2018, Goldman said.
Eoptolink's earnings are accelerating through the year, with Goldman forecasting diluted EPS of 1.99 yuan in the first quarter, 3.34 yuan in the second, 4.56 yuan in the third and 4.96 yuan in the fourth — reflecting the ramp in high-speed module shipments.
The guidance raise signals that AI infrastructure demand continues to outpace supply in the optical component market. Investors will watch for Eoptolink's full first-half results and management commentary on 1.6T module pricing and margins when the company reports in the coming weeks.
This article is for informational purposes only and does not constitute investment advice.
