It has been a while since I penned an article around Omnivision Technologies (OVTI), which supplies camera chips found in mobile devices such as Apple's (AAPL) iPad. Given earnings are due out tomorrow, it seems appropriate to provide a brief review on the company and what catalysts could possibly move this cheap stock higher.
Possible catalysts for OVTI:
- The company reports earnings tomorrow. Consensus estimates call for 21 cents a share in earnings on ~$318mm revenues. Omnivision has easily beat on both the top and the bottom lines during its last two quarterly reports.
- It just launched an important cost efficient high definition camera chip for smartphones, tablets and other mobile devices (Ex, smart TVs). It should show in volume production by the third quarter.
- IDC again significantly raised their estimate for tablet sales this year. It now expects better than 58% growth in shipments in 2013 to ~229mm devices. This is good news for the iPad and iPad mini as well as other tablet makers, which is good for Omnivision.
- The stock just crossed over its 200 day moving average over the last week for the first time in a few months.
OmniVision Technologies designs semiconductor image-sensor devices worldwide. The company primarily offers CameraChip image sensors for mobile devices.
4 reasons OVTI is a good value pick up at under $15 a share:
- Approximately 25% of its market capitalization is represented by net cash on its balance sheet.
- The 9 analysts that cover the stock have a median price target of $21 on the shares. Northland Securities initiated coverage on OVTI in late April with an "Outperform" rating. Robert W Baird upgraded the shares from "Neutral" to "Outperform" in March.
- The stock sells for under 9.5x forward earnings, a discount to its five year average (15.1).
- OVTI has a five year projected PEG of under 1 (.55) and is selling near the bottom of its five year valuation range based on P/S, P/B and P/CF.