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Strong End-Markets Can Lead OmniVision Technologies to New Highs

August 22, 2014 | About:
jaggom

jaggom

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Fiscal 2014 turned out to be a merry year for OmniVision Technologies (OVTI). The company came out with a strong performance, having delivered better than expected financial results in the fourth quarter. The strong conclusion to the year was also reflected on the stock exchange as the company’s shares shot up. With its future looking bright, OmniVision is all set to reach new highs in fiscal 2015 as its positive guidance depicts. Let us take a closer look at OmniVision’s underlying business, and what more the company has in store for investors.

Quarterly performance

Moving on to financials, OmniVision ended fiscal 2014 on a strong note, reporting revenue of $331.0 million and beating the consensus estimates of $292.1 million. OmniVision posted impressive growth in the non-GAAP net income. Its net income grew 37% to $23.9 million. On the EPS front, the company came up with $0.40 per diluted share while analysts were modeling $0.27 per share for the fourth-quarter 2014.

OmniVision saw good numbers in the last fiscal year. Considering the success, its management is optimistic about delivering better results in future. However, there are many areas where OmniVision can easily tap the markets. There are new technologies and applications entering the market on the back of which OmniVision can capture a big share in the market. It is working on various growth initiatives to be profitable in the future.

Strategies

OmniVision is working on certain strategies, which are really helping it to move forward. The company is wisely using its revenue by investing in the automotive and security markets. These investments are giving meaningful returns to the company, and it will help it reach new highs in the future. Another impressive advancement by the company comes from the innovative approach made by it with PureCel Technology.

With many special features such as light sensitivity, low power and cost optimization solutions, it is expected to penetrate smart phone and the tablet market in a better way. Moreover, OmniVision is seeing strong demand for PureCel sensors. In order to meet the growing demand, it is ramping up the production. This is a clear indication that PureCel will surely create bright market opportunities in the emerging markets in future.

Increasing opportunities

The LTE rollout in China is a profitable opportunity for many companies, and OmniVision is also delighted to see enough room for it in the scene. As the customers are transitioning from 3G smartphones to 4G enabled phones and the growing tilt of the customers towards tablets, OmniVision finds a great opportunity.

In response to this growing opportunity, OmniVision has introduced new products in this market, and the company is expecting them to show positive signs in the future. Being focused on the mobile, tablet and PC markets, OmniVision is refreshing its product offering by making innovations in the products. For example, with new equipments such as 3D depth information, using photography to get better image quality and transition to higher resolution is one of its latest innovations in its product offering.

Moving on to automotive segment, OmniVision is seeing strong demand for cameras needed for rear view in cars. Also, this fact is further justified by the recently released federal mandate by the National Highway and Traffic Safety Administration which stated that cars under 10,000 pounds will require a rearview camera by May 2016, which again presents a bright opportunity for OmniVision to capture. In order to make its product competitive against its peers it has developed ASIC which help its automotive sensors to add distortion correction and to improve light sensitivity.

Conclusion

Moving on to the ratios, OmniVision appears promising with a strong valuation for the future. Also, with a forward P/E of 13.58, its earnings are expected to grow at a good pace. The long-term prospects of the company also look promising with a good CAGR of 12.10% for five years. As OmniVision is penetrating the mobile, automotive and security markets, it can grow in the long run, making it an attractive investment.


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