Analog integrated circuit designer Spectra7 Microsystems (TSXV:SEV) has the potential to be a disruptor in the consumer electronics space, says Global Maxfin Capital analyst Manish Grigo.
In a research report to clients Monday, Grigo initiated coverage on Spectra7 Microsystems with a “Strong Buy” recommendation and 12-month target price of $1.00, implying a return of 69.5% at the time of publication.
Markham-based Spectra7 builds integrated circuits that make electronic products smaller, lighter and faster. Grigo says the company’s technology is applicable in multiple verticals such as tablets, smartphones and, most immediately, the virtual reality space. Spectra 7 currently has 39 patents, with 13 more pending.
While Spectra7’s opportunity is both broad and specific, Grigo says it can solve a one vexing problem immediately.
“SEV’s analog chip has addressed a long-standing problem that has plagued old versions of VR head mounted displays (―HMDs‖), namely weight, latency, price, and size. Prior to SEV’s solution, VR head gear was a mishmash of four cables (data, video, audio and power), which was cumbersome to wear and suffered from latency effect (slow speeds led to motion sickness). SEV’s analog chip has enabled HMD manufacturers to reduce four cables to one, which led to a weight reduction of over 90% and in the process has made VR headgear more consumer friendly,” said Grigo.
Grigo says Spectra7 also has a “massive” opportunity in the HD TV market, which is shifting from 1080p resolution to 4K resolution. He thinks the company’s recent win with a tier one TV manufacturer is the first of many such victories it will enjoy.