ViXS Systems is a Buy, says Cormark analyst Tse

Cormark analyst Richard Tse says the growth of digital content is creating a secular technology cycle that ViXS is well positioned to benefit from. ViXS Systems (TSX:VXS) should be on your radar, says Cormark analyst Richard Tse, because the multimedia products it sells to OEMs around the world are leading an industry that is itself seeing a major product cycle shift.

In a research report to clients yesterday, Tse initiated coverage of ViXS Systems with a BUY rating and $4.00 one-year target price.

Tse says the growth of digital content is creating a secular technology cycle that ViXS is particularly well positioned to benefit from. The Toronto-based company’s specialty, he explains is in “integrated SoC” solutions; it writes complex code onto silicon chips that manages content delivery to end devices. The Cormark analyst says it has become more cost-effective for consumer electronics companies to outsource this function to stay current, and ViXS simply offers a technically superior result.

Tse points out that ViXS sits squarely in the middle of one of the most lucrative trends; the growth of video traffic. He cites Cisco’s recent prediction that video sourced from the internet will account for 41% of total internet traffic by 2016. ViXS XCode 6400 SoC he notes, is the first chip to support upcoming standards for next generation video content.

While ViXS may be new to investors -it went public through a capital pool transaction last July- the 12 year old company has already invested $240-million into research and development that has resulted in more than 400 patents. Add in a highly technical team than is comprised of 85% engineers and the result is an organization that has the technical experience to “stay in front of rapid changes” and has “proved it can stay ahead of the curve,” says Tse.

At press time, shares of ViXS Systems were even at $2.93.

________________________________________________________________________________________________________________