Needham & Company reiterated a Buy rating on AXT, Inc. (NASDAQ: AXTI), and raised the price target to $6.50 (from $5.50), following the company's 3Q earnings report. AXTI reported revenue of $21.9MM, surpassing company guidance of $20.5-21.5MM and the Street's $21.4MM estimate. EPS of $0.07 also beat guidance of $0.03-$0.05 and came in ahead of consensus of $0.03. 4Q revenue guidance of $18.5-19.5MM misses the Street's $21.3MM mostly due to softness in demand for raw materials and weakness in S.I. GaAs. EPS was guided to $0.02-$0.04.

Analyst Edwin Mok commented, "AXTI reported strong 3Q16 results but provided sequentially lower 4Q16 guidance. Despite near-term weakness in the Chinese fiber optic space slowing InP growth, we believe the multiple growth drivers for the InP market remain intact. Given 2 quarters of strong gross margins, we are increasingly confident the new levels can sustain, with more upside as InP recovers. The stock pulled back in after hour trading on the weaker guidance, but we see it as a buying opportunity given the transient nature of the setbacks and substantially higher profitability in the model. Maintain our Buy and raise our PT to $6.50."

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Shares of AXT, Inc. closed at $5.73 yesterday.