Omnivision Looks Solid Heading Into Earnings Tomorrow

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It has been a while since I penned an article around Omnivision Technologies (NASDAQ:OVTI), which supplies camera chips found in mobile devices such as Apple's (NASDAQ: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:

  1. Approximately 25% of its market capitalization is represented by net cash on its balance sheet.
  2. 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.
  3. The stock sells for under 9.5x forward earnings, a discount to its five year average (15.1).
  4. 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.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in OVTI over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.