Down 20 per cent in the month of November, Spectra7 Microsystems (TSXV:SEV) is a buy, says Mackie Research Capital analyst Nikhil Thadani.
Thadani says the fourth quarter of 2015 and first quarter of 2016 are a “potentially transformative” time for the consumer build-out of virtual reality and augmented reality. He notes there is growing speculation that Oculus could announce the consumer headset release date & final pricing as soon as Thursday, December 3. This would put pressure on the other two big virtual reality players, HTC and Valve, to step up the release of their headsets.
The analyst reminds that Spectra7 chips were in Oculus developer kit cables last year, and the consumer Oculus Rift headset that was unveiled this past summer also contained them, suggesting that the same chips will be used in the new iteration.
Thadani says the initial success Spectra7 had in the virtual reality space should soon become real orders.
“SEV’s ~30 VR & AR design wins to date should serve entrench SEV in the rapidly emerging VR/AR eco-system,” he says. “We would expect design wins to translate into orders, revenue and cash flow as consumer demand builds.”
In a research update to clients today, Thadani maintained his “Buy” rating and one-year target price of $1.00 on Spectra7 Microsystems, implying a return of 150 per cent at the time of publication.