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O2Micro International, Inc. (OIIM) has a strong position in the notebook computing market and a growing position in the LCD monitor and LCD TV markets. Management has focused investments into these new vertical markets, attempting to broaden its product portfolio.
The LCD TV markets represent an opportunity to grow its revenue base and boost margins to the low sixties; however, the soft macro environment has delayed this. O2Micro International, Inc. is pricing at a very reasonable valuation (2.65 per share in cash). Consequently, we reiterate our Buy rating on OIIM.
The persistent weakness in the notebook segment may signify a fundamental shift in the product mix of the company. However, new products have begun to reverse the slide in notebook sales. Consequently, we believe the stock will trade at the higher valuation metric levels. We are setting our price target to $6.00.
Read the full analyst report on OIIM
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