Omnivision (OVTI) Fair Value Closer to $32/Share - Needham & Company
Needham and Company is boosting its price target on Omnivision Technologies (Nasdaq: OVTI) from $27 up to $32 following this mornings non-binding takeover bid from Hua Capital Management.
Analyst Rajvindra Gill commented,
If we analyze the last three major acquisitions -- Montage, RDA, & Spreadtrum-- done by a Chinese state-owned entity (whether by PDTSI or Tsinghua Unigroup), we’ve see an average 5-10% bump from the initial bid. In addition, what makes this an interesting case, is that OVTI would mark the first unsolicited bid of a U.S. domiciled semiconductor company made by a Chinese state-owned entity. Therefore, we could see another U.S. based strategic company make a bid in order to capture key semiconductor assets (i.e. image sensors) or witness a competitive bidding process by another Chinese state-owned entity, such as Tsinghua group, as we saw with the bidding process for RDA. Our $32/share would represent ~1x EV/sales on our FY15 ests, which we think is an appropriate valuation given OVTI’s dominance in the Chinese smartphone market and growing momentum in the automotive market. This multiple would represent a 16% premium to the current share price (stock is up13% today on the news) and 35% premium to what ON Semi acquired Aptina (EV/sales 0.76x).
OmniVision Technologies closed at $24.60 yesterday.
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