OmniVision Technologies (OVTI, Financial) has gotten off to a strong start in fiscal 2015. The company is generating good cash flow, and with a strong balance sheet, it looks well-positioned to deliver a strong operational performance. The company is bringing new products to the market to capture more share, and this should allow the company to improve its performance in the future.
New products are important to growth
The prime focus of the company lies in the new application development. Its new flagship PureCell sensors are seeing good traction in the market. The company has already launched 30-megapixels, 8-megapixels and 5-megapixels and 2-megapixels. With best in-class image quality, light sensitivity and power efficiency, OmniVision’s products are expected to contribute better to its top line in the coming days.
Besides this, OmniVision is also developing full complement of ASIC with advanced procession functions by combining the sensors with image processing and other peripheral functions. With the growth in core smartphones, tablets and PC cameras, the demand for 3D depth application for better picture quality is gaining much steam. OmniVision is seeing handsome growth opportunities in this area. To further enhance this initiative, the company has also entered a partnership with industry leaders to enable 3D depth sensing for both smartphones and tablets.
Solid adoption rates
Moving on, OmniVision is seeing robust adoption for smartphones and tablet in the markets such as China and India. With such a robust momentum, OmniVision is expecting growth in these areas in the coming days. This continued proliferation of these new applications in its core markets and the emerging potential markets including the booming automotive market is expected to drive robust demands for the image sensing in the markets.
India and China continue to be some of the potential markets for OmniVision and with the rapid growth in these markets the company is confident of these regions to be its key growth drivers in the coming days. It is also investing significantly in the resources in India, expecting it to be a significant geography for OmniVision.
OmniVision is focusing on exploring new ventures that can drive its profitability further. It is laser focused on developing new markets for cameras. It is also seeing great opportunities in the automotive segment and is expecting it to be a key growth driver in the future. The ADAS system is in great demand over automotive OEMs and OmniVision sees great opportunities for strong financial performance in the future.
The security market is also growing rapidly and people are now more demanding towards the security cameras. OmniVision has been into developing security products for a long time and it is now thinking to drive this further, expecting it to become a key contributor to company’s top line in the coming quarters. Moreover, in order to be a market leader and to hold a good position, the company is focusing on supply chain diversification. With such efforts, OmniVision is expecting to pursue profitable business across all of its potential end markets.
Conclusion
Moving to the fundamentals, with trailing P/E of 13.09 the stock is cheap and the strategies and the new products in demand, OmniVision is expected to post good earnings in the coming quarters. Another attracting thing in the stock is its strong balance sheet which can be a key point of attraction to the investors, also the growing demands for security devices and sensors in the automotive segment are expected to drive its long term demands as well making it a good long term holding, So as of now, OmniVision Technologies is a good pick.
