Lazard Capital Lowers PT on OmniVision Technologies to $15

Lazard Capital Markets has published a research report on OmniVision Technologies OVTI after the company reported disappointing guidance. In the report, Lazard Capital Markets writes, "Disappointing guidance, still a journey uphill. OVTI guided to revenue of $160-$180M and pro forma EPS of $0.05-$0.17 (-22% Q/Q at midpoint), 12% lower than our ests of $194M/$0.18 at the midpoint of guidance. In addition to losing the iPhone 4S business, the company has seen broader order cutbacks in handset (HTC), tablet, and PC. However, the stock is likely in oversold territory now that the Street is modeling the loss of all Apple business and the strong cash support. We see cash breakeven level at ~$140M in sales. Inventory buildup. Inventories are at $250M, up 74% Q/Q from $144M in 1Q12. The inventory could cause margins to decline over the next couple of quarters as the company may need to take writedowns. While the breadth of customers in the market may sustain shelf life of inventory, the size of the buildup and speed of product cycles is a concern." Lazard Capital maintains its Buy rating and has lowered the price target from $22 to $15 on OmniVision, which is currently trading down $0.72 from yesterday's $11.19 closing price.