If you’ve ever taken an iPhone picture—or read about someone that has—you’ve used a camera that is comprised of parts from these three big companies: OmniVision Technologies, Inc. (NASDAQ: OVTI), Sony Corporation (ADR) (NYSE:SNE), and Larchan Precision. With global cellphone sales topping 1.75 billion units in 2012, and with Apple Inc. (NASDAQ:AAPL) and Samsung together making up 52% of that number, companies like Omnivision, Sony Corporation (ADR) (NYSE:SNE), and Larchan Precision can rest assured there will be plenty more market share to capture.
OmniVision Technologies, Inc. (NASDAQ:OVTI)
This company is the provider of the front-facing camera on the iPhone. OmniVision Technologies, Inc. (NASDAQ:OVTI) designs, develops, and markets semiconductor image-sensor devices worldwide, mainly through its “CameraChip” image sensors. This particular image sensor is a solution for various imaging functions in a smartphone, such as image capture, image processing, signal conversion and output of images and video.
Financial Snapshot
Over the past five fiscal years, ending FY2013 on April 30, 2013, OmniVision Technologies, Inc. (NASDAQ:OVTI) has doubled its gross revenue from $799 million to $1.4 billion. In that same timeframe, it has kept its average gross profit margin above 25%. Cash flow suffered a bit in FY2013 due to a -$163 million change in inventories, which bled $60.6 million in cash off of the balance sheet. That being said, comparing cash to debt, it has $172 million in net cash, which amounts to $3.18 per share.
Outlook
Competition in the cellphone and smartphone market will continue to increase, as the Andriod, iOS, and Research in Motion operating systems joust for hard-to-come-by market share. Because of this, OmniVision Technologies, Inc. (NASDAQ:OVTI) will be called upon to further innovate alongside one or more of these operating systems to satisfy the demands from both the manufacturers and consumers.
Analyst consensus estimates have total revenue climbing to $1.65 billion in FY2015, giving shareholders a forward EPS of $1.85. With these numbers, OmniVision Technologies, Inc. (NASDAQ:OVTI) shares are only trading at 9 times 2015 expected earnings. If we were to price the stock at the forward earnings multiplier of the S&P 500 (14.85 times forward earnings), we can put a price tag of $27.50 on this stock. This price target represents a 63% premium over July 24, 2013 closing price for the stock.
Sony Corporation (ADR) (NYSE:SNE)
Sony Corporation (ADR) (NYSE:SNE) is a multibillion-dollar global electronic equipment, instrument, and device developer and manufacturer. It wasn’t until 2011 where a company, IHS iSuppli, took apart the camera aperture in the phone in an attempt to find whom the OEM of the camera was. What they found was OmniVision Technologies, Inc. (NASDAQ:OVTI)’s technology, coupled with Sony Corporation (ADR) (NYSE:SNE)’s imaging sensor, as the backbone behind the camera lenses.
