Why OmniVision Technologies, Inc. Shares Plunged

Why OmniVision Technologies, Inc. Shares Plunged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of image sensor specialist OmniVision Technologies, Inc. sank 10% today after its current-quarter outlook disappointed Wall Street.

So what: OmniVision's Q2 results -- profit more than doubled on a revenue increase of 2% -- easily topped estimates, but downbeat guidance for Q3 reinforces concerns over extremely volatile demand. Additionally, the disappointing guidance suggests that competition from local Chinese rivals continues to intensify.

Now what: Management now sees adjusted Q3 EPS of $0.28-$0.44 on revenue of $310 million-$340 million, versus the consensus of $0.43 and $399.5 million. "While end-market demand remains volatile, our scale, technology and product portfolio should position us well to weather such volatility over the coming years," CEO Shaw Hong reassured investors. Given OmniVision's still-rock solid balance sheet and cheapish forward P/E, now might even be an opportune time to buy into that long-term bull talk.

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The article Why OmniVision Technologies, Inc. Shares Plunged originally appeared on Fool.com.

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Originally published