Alpha And Omega Semiconductor Limited Is A Tightly Held Stock
While insiders at Alpha And Omega Semiconductor Limited (NASDAQ: AOSL) have been selling shares over the past few quarters it poses no threat to the stock prices. Insider sales amount to less than 0.30% of the market cap with shares near $47 and insiders still hold nearly 20% of the company. If they thought the company was in bad shape we think there’d be a little more selling even with lock-ups in place. On the other hand, the institutional activity has been robust and robustly in favor of the bulls.
The annualized data from Insidertrades.com shows that institutional activity has been net bearish for the past 12 months. What that data doesn’t show is that most of those sales were made in the 2nd quarter of 2021 and that, since then, the balance of activity has been overwhelmingly bullish. Institutions have purchased a net $61 million worth of the shares since then worth about 5% of the total market cap. This brings institutional holdings up to 56.35% and growing.
The analysts are still mostly on the fence about this small-cap chip maker but those that do cover it are bullish. The three ratings we have amounted to a solid Buy with a consensus price target that implies the stock is trading at a rough 18.5% discount. Based on the Q2 results and outlook, we think more analysts will get on board this market and that both the consensus and high price targets will be moving higher.
Alpha And Omega Semiconductor Surpasses All Expectations
Alpha And Omega Semiconductor were expected to do well because of its position within the semiconductor industry. The company makes a wide array of power-control semiconductor applications for computing, consumer tech, communications, and industrial purposes. The $193.3 million in revenue, however, is up 21.7% and beat the consensus by 270 basis points. The revenue was driven by strength in all end markets and accompanied by wider margins which is the detail we really like.
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Moving down to the income, the company reported a 470 basis point improvement in the GAAP gross margin and a 140 basis point improvement in the adjusted gross margin. Margin strength carried through to the bottom line as well with the operating margin up 100 basis points GAAP and 110 basis points adjusted. On the bottom line, the $1.20 in adjusted EPS is up more than double from last year and beat the consensus by $0.16 and the guidance for the current quarter is strong as well. The company is expecting revenue of $194 million, give or take, versus the $184 consensus estimate and for the adjusted gross margin to shrink slightly.
The Technical Outlook: Alpha And Omega Looks Ready To Reverse
The Q2 results and outlook were enough to get shares moving higher but weren’t enough to keep them there. The stock is facing resistance at the short-term moving that may cap gains but we don’t think so. The stock is cheap trading at only 11X its consensus earnings estimate and the market has institutional support. In our view, assuming the market can get above the 30-day EMA, the stock is ready to confirm a reversal that began a few weeks ago and retest the recent highs near $65. If demand and growth hold up like we think they will a move to new highs is likely as well.
Companies in This Article:
| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| Alpha and Omega Semiconductor (AOSL) | $22.19 | +3.2% | N/A | -35.22 | Hold | $30.00 |
Experience
Thomas Hughes has been a contributing writer for InsiderTrades.com since 2019.
Areas of Expertise
Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies
Education
Associate of Arts in Culinary Technology
Past Experience
Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights.
