Needham & Company Reiterates a 'Strong Buy' on OmniVision (OVTI); Sizing Up the Apple Question; Worst Case Scenario Baked In
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Price: $29.38 --0%
Rating Summary:
2 Buy, 10 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
2 Buy, 10 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Needham & Company reiterates a 'Strong Buy' on OmniVision Technologies (NASDAQ: OVTI) price target of $45.00.
Needham analyst says, "The prevailing concern around OVTI’s share price has always centered on the impact of a dual-source relationship with Apple (Nasdaq: AAPL) (30-35% customer). To help frame this risk to investors, we conducted a sensitivity analysis, which examines the financial impact to OVTI if Apple were to dual source its iPhone production with Sony. At current share levels, the stock is already factoring a 50% share loss to Sony, which is a worst case scenario, in our view. OVTI is currently the sole supplier to the Apple iPhone. The share loss at Apple would result in CY12 revs declining only 8% and Non-GAAP EPS declining 14% to $2.88. As such, the current share price is implying ~8x P/E multiple (or 6x ex-cash) on a “worst case scenario” of earnings. We believe OVTI is competitively positioned at Apple and we don’t anticipate a 50-50 split with the iPhone 5. We see the risk/reward profile as attractive with 20% downside risk, but nearly 100% upside factoring in our base case of 75-25% split at AAPL."
For more ratings news on OmniVision Technologies click here and for the rating history of OmniVision Technologies click here.
Shares of OmniVision Technologies closed at $23.60 yesterday.
Needham analyst says, "The prevailing concern around OVTI’s share price has always centered on the impact of a dual-source relationship with Apple (Nasdaq: AAPL) (30-35% customer). To help frame this risk to investors, we conducted a sensitivity analysis, which examines the financial impact to OVTI if Apple were to dual source its iPhone production with Sony. At current share levels, the stock is already factoring a 50% share loss to Sony, which is a worst case scenario, in our view. OVTI is currently the sole supplier to the Apple iPhone. The share loss at Apple would result in CY12 revs declining only 8% and Non-GAAP EPS declining 14% to $2.88. As such, the current share price is implying ~8x P/E multiple (or 6x ex-cash) on a “worst case scenario” of earnings. We believe OVTI is competitively positioned at Apple and we don’t anticipate a 50-50 split with the iPhone 5. We see the risk/reward profile as attractive with 20% downside risk, but nearly 100% upside factoring in our base case of 75-25% split at AAPL."
For more ratings news on OmniVision Technologies click here and for the rating history of OmniVision Technologies click here.
Shares of OmniVision Technologies closed at $23.60 yesterday.
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