OmniVision Upgraded On Market Share Gains

NEW YORK (AP) — Morgan Keegan upgraded OmniVision Technologies Inc. on Monday to its highest rating, saying the chip maker is taking market share from a major competitor and is on track to increase profitability.

Shares of OmniVision — which makes image-sensing chips — are cheap compared to its earnings potential, wrote analyst Harsh Kumar in a note to investors Monday. The stock is up nearly 25 percent since posting fiscal first-quarter results and a strong second-quarter outlook on Aug. 27. It has more than doubled in the year to date.

Kumar also noted that he thinks OmniVision has gotten "a leg up" on its major competitor, Aptina Imaging Corp., a privately-held company in which Micron Technology Inc. sold off its majority interest this June.

He also predicts that likely upgrades to image sensors in smartphones and laptops will improve profit margins, and the company has opportunities in the auto sector as well. Kumar upgraded OmniVision to "Outperform" from "Market Perform" and said he felt a fair valuation range for the stock was between $20 and $22.

Shares of the Santa Clara, Calif., company rose 38 cents, or 2.3 percent, to $16.99 in morning trading. Earlier in the session shares set a 52-week high of $17.35.