Needham & Company Upgrades Vimicro International Corp. (VIMC) to Buy Post Q3

November 8, 2012 9:03 AM EST Send to a Friend
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Price: $6.05 +4.49%

Rating Summary:
    1 Buy, 0 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 14 | Down: 28 | New: 51
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Needham & Company upgraded Vimicro International Corp. (NASDAQ: VIMC) from Hold to Buy with a price target of $2.50 following solid Q3 and guidance.

The firm comments, "Vimicro delivered a solid 3Q12, with results coming in on the high end of guidance, and beating our estimates. The strong results were driven by better than anticipated demand for its IP Surveillance solutions which were up 35.9% sequentially and are up 45% year-overyear. VIMC is benefitting from Chinese government initiatives driving further adoption of surveillance equipment in many provinces. VIMC once again remained profitable on a non-GAAP basis and reported positive cash flow from operations. OPEX continues to remain lower than historical levels (nearly 50% below 2011 levels) due to its recently completed restructuring efforts. We have remained on the sidelines waiting for the surveillance business to ramp, and having reported its first quarter where revenue from surveillance was greater than 30%, we're upgrading VIMC to a Buy and establishing $2.50 price target. With $1.32 of net cash per share or 90% of its market cap in cash, we see limited downside for the shares. Our $2.50 PT represents just 0.4x EV/sales on our revised 2013 ests. We see 20% revenue growth next year with potential upside in the image processing business. We would be buyers at these levels.

For an analyst ratings summary and ratings history on Vimicro International Corp. click here. For more ratings news on Vimicro International Corp. click here.

Shares of Vimicro International Corp. closed at $1.37 yesterday.


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