ViXS is still a buy, says Paradigm Capital

Following the company’s fourth quarter results yesterday, Paradigm Capital analyst Daniel Kim maintained his bullish stance on ViXS (TSX:VXS).

Yesterday, ViXS reported its fourth quarter and fiscal 2015 results. In the fourth quarter, the company lost $3.8-million on revenue of $11.2-million, a 60% bump over last year’s $7.0-million Q4 topline.

“In fiscal 2015, ViXS executed on its strategy, achieving four quarters of revenue growth. We successfully deployed our XCode 6400 into the marketplace with a suite of Tier 1 customers, while maintaining strong revenue in our XConnex product line. At the same time, ViXS continued to innovate with the announcement of our groundbreaking XCode 6800,” said Hugh Chow, interim president and chief executive officer, ViXS Systems.

Kim, noting that ViXS fell below the street consensus of $12.6-million, says the revenue number beat his estimate of $9-million. The analyst says the quarter continued a recent trend of solid reports highlighted by improving margins and increasing traction with new products.

Kim says his investment thesis that ViXs is a world leader in the video processing space that will overcome the bumps in the road it has faced remains intact.

“There are a number of powerful near-term catalysts for the company,” he said. “Design wins are growing, which are not included in our forecasts and provide potent upside, volume is just ramping up in new product categories like Ethernet over Coax (think broadband delivery in multi-unit dwellings), and new sockets are being won with MOCA products, which helps bring revenue stability to legacy products”.

In a research update to clients today, Kim maintained his “Buy” rating and one year target of $2.75, implying a return of 133% at the time of publication.