Zoran Corp. a Small-Cap Buy

Zoran Corp.'s (ZRAN) revenues in the last few quarters were disappointing with several sectors being influenced by the poor economic environment. The company currently expects Q1 2009 revenue to be down significantly, blaming the economic downturn and weak consumer spending. Zoran is facing significant pricing pressure in all its verticals and is recording lower booking levels.

On a positive note, cash flow excluding acquisitions has been positive, and total cash should provide a buffer to further declines in stock prices.

With a price target of $14.00, we maintain our Buy recommendation on ZRAN. In our opinion the fundamental strength in Zoran's diverse technologies make the stock worth more than its weak peers. We would use an estimate of future sales per share of $6.47 per share plus cash of $7.76 per share for a value of $14 a share.

Priyanka Poddar contributed to this report.

Read the full analyst report on ZRAN