OmniVision (OVTI) Hits a 52-Week High on Solid Q2 Results
Shares of OmniVision Technologies, Inc. OVTI hit a new 52-week high of $29.48 on Dec 4, eventually closing at $29.19. The company returned 10.2% in the last one year and 12.3% year-to-date. Average volume of shares traded over the last three months was roughly 646K.
What is Driving OmniVision?
OmniVision Technologies designs, develops and markets high performance, high-quality, cost-efficient semiconductor imaging devices for computing, communications and consumer electronics applications. The company's image sensors are used in cameras and camera-related products such as personal computer cameras, digital still cameras, personal digital assistant cameras and mobile phone cameras.
The company boasts a strong position in the mobile and auto markets and is making its presence felt in security and other areas. Also, strong growth prospects, mix shift to higher-resolution sensors and strengthening position in the fast-growing Chinese market remain the growth drivers.
The price appreciation may be attributed to OmniVision’s strong fundamentals and better-than-expected second-quarter fiscal 2016 results reported on Dec 3.
In the second quarter, earnings per share of 23 cents comfortably beat the Zacks Consensus Estimate of 18 cents. Also, revenues of $343.1 million were up 4% sequentially but down 12.9% year over year. Revenues exceeded management’s guidance range of $300.0–$330.0 million as well as the Zacks Consensus Estimate of $327.0 million.
Moreover, the chances of a takeover are keeping the shares buoyant. At the end of April, OmniVision signed a definitive agreement to be acquired by a consortium of Hua Capital Management, CITIC Capital and GoldStone Investment. Under the agreement, the consortium will acquire all the outstanding shares of the company in a cash transaction worth $29.75 per share or a total of about $1.9 billion. Though all the necessary approvals are yet to be obtained, OmniVision expects the acquisition to close in the third or fourth quarter of fiscal 2016.
Moreover, the stock has delivered an average earnings surprise of nearly 48.8% over the trailing four quarters. This Zacks Rank #3 (Hold) stock has a market cap of approximately $1.74 billion and a long-term expected earnings growth rate of 120%.
Stocks to Consider
Some better-ranked stocks in the technology space are CEVA Inc. CEVA, FormFactor Inc. FORM and Integrated Device Technology, Inc. IDTI. All the stocks sport a Zacks Rank #1 (Strong Buy).
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