O2Micro International, Ltd. (NASDAQ:OIIM) Experiences Revenue Growth Returns, Stock Price Advances

Fabless semiconductor firm, O2Micro International, Ltd. (NASDAQ:OIIM), experiences revenue growth for the first time since Q4, 2013.

O2Micro (OIIM) reported Q3 2016 revenues of $14.4 million versus $13.7 million a year ago, within the company’s guidance. More importantly, revenue grew year over year for the first time since Q4 2013 and guidance for Q4 is for revenues in the range of up 2-8% sequentially (or $14.7 to $15.6 million) versus $13.4 last year. This means another quarter of revenue growth no matter where in the range they fall.

Its current cost structure now shows cash breakeven at $15.5-16.5 million in quarterly revenues. This is a revenue reduction of $1 million since last quarter. Profitability breakeven is now at $17 to $18 million down from $18.5-9.5 million last quarter. At quarter end, the company had $53.1 million in cash and equivalents (or $2.07 per ADS) up $5.6 million from Q2. Cash increased because of the sale of some real estate in Shanghai, combined with the sale of some long-term investments in the quarter despite negative EBITDA of $297,000.

Long suffering investors must be heartened at revenue growth, with more predicted in Q4, as O2Micro inches closer to cash breakeven. Should this truly be the turning point for the company, we expect further stock price appreciation as it moves toward profitability. Using an industry average enterprise value to trailing 12-month sales of 5.2 times, and applying it to OIIM’s $58 m Q3 revenue run rate, we would calculate an enterprise value of $302, a market cap of $329 m and a price of $12.84 per share. At its current enterprise value of negative $7.3 million it is trading at less than the value of its real estate and has considerable upside.

O2Micro International is a fabless semiconductor firm that designs, develops and markets high performance integrated circuits primarily for power management and battery management for TV backlighting, LED lighting, and portable tools and appliances. It has had declining revenues and losses for the past few years, but just reported revenue growth for the first time since 2013 showing a possible inflection point. There are activists involved in the stock.

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O2Micro International, Ltd. (NASDAQ:OIIM) shares are trading +16.38% on the news and in the range of $1.78 – 2.15 during the current trading session.  When taking a look at which direction the stock might be headed, investors often look to brokerage analysts who cover the stock.  Sell-side research firms on Wall Street currently have a consensus one-year price target of $3.88 on the stock.  This is according to brokerage analysts polled by Thomson Reuters First Call.

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Sell-side analysts are projecting earnings per share of $-0.07 for the next fiscal quarter.  For the current year, analysts are predicting earnings of $-0.25 per share according to First Call.

In looking at where the stock is trading on a technical level, the stock is trading +19.61% away from its 50-day moving average of $1.72.  Based on the most recent available data, the equity is -4.19% off of its 52-week high of $2.15 and +70.25% away from its 52-week low which is $1.21.

Today, the stock opened at $1.78 and the last bid at the time of writing stood at $2.06.  During the session thus far, the equity dipped down to $1.78 and touched $2.15 as the high point.  O2Micro International, Ltd. (NASDAQ:OIIM) has a market cap of $52.80M and has seen an average daily volume of 39,357 over the past three months.

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