Ahead of the Bell: OmniVision Moves Up

NEW YORK (AP) -- Shares of OmniVision Technologies Inc. jumped in premarket electronic trading Friday after the image sensor maker offered a strong fiscal second-quarter forecast.

OmniVision's fiscal first-quarter results, which it reported after the bell Thursday, disappointed investors. But its second-quarter profit and sales forecasts led to some optimism.

The company expects to earn between 34 cents and 46 cents per share in the quarter ending October 31, excluding stock-option expenses, on $210 million to $240 million in revenue.

Analysts polled by Thomson Financial forecast a profit of 23 cents per share on $170.9 million in revenue.

The stock gained $1.77, or 9.7 percent, to $21.68 premarket. Shares closed at $19.91 Thursday.

Morgan Stanley analyst Aaron Husock maintained an "Overweight" rating on the stock, and increased his price target to $26 from $22. He said prices for OmniVision's products are rising, and its margins should grow as customers keep buying more high-resolution cameras.

"OmniVision's business is accelerating and further gross margin improvement should drive earnings power even higher than our previously well above consensus estimates," he said.

Other analysts, including Daniel Gelbtuch of CIBC World Markets, said OmniVision is going to have to deal with tougher competition. They felt that the margin improvement Husock predicts has not materialized.

"Though handsets and personal computers are driving strong gains, competition is likely to intensify as migration to higher resolutions develops," Gelbtuch said. "With margin recovery not yet evident we remain on the sidelines."