tiprankstipranks
Trending News
More News >
OSI Systems (OSIS)
NASDAQ:OSIS
Advertisement

OSI Systems (OSIS) AI Stock Analysis

Compare
298 Followers

Top Page

OSIS

OSI Systems

(NASDAQ:OSIS)

Rating:72Outperform
Price Target:
$244.00
▲(5.91% Upside)
OSI Systems displays strong financial performance with consistent growth and profitability, backed by a solid balance sheet. Although technical indicators suggest potential short-term challenges, the company's strong earnings guidance and expanded credit facility support a positive long-term outlook. Valuation remains a concern due to a high P/E ratio, but overall, OSI Systems is well-positioned for future growth.
Positive Factors
Financial Performance
Revenue of $505mn exceeded expectations, signaling strong financial performance.
Market Position
OSIS holds the number-1 market share at the US/Mexico and the US/Canada borders for Non-Intrusive Inspections solutions.
Strategic Initiatives
The turnkey Security-as-a-Service model has been particularly successful in emerging economies.
Negative Factors
Cash Flow
Accounts receivable increased significantly, pressuring free cash flow, which resulted in a negative figure.
Revenue Sources
Revenue from Mexico is declining, which could impact overall revenue unless offset by other sources.

OSI Systems (OSIS) vs. SPDR S&P 500 ETF (SPY)

OSI Systems Business Overview & Revenue Model

Company DescriptionOSI Systems, Inc. designs and manufactures electronic systems and components worldwide. It operates in three segments: Security, Healthcare, and Optoelectronics and Manufacturing. The Security segment offers baggage and parcel inspection, cargo and vehicle inspection, hold baggage and people screening, radiation detection, and explosive and narcotics trace detection systems under the Rapiscan Systems, AS&E, and Gatekeeper names. It also provides site design, installation, training, and technical support services; and security screening solutions under the S2 name. The Healthcare segment offers patient monitoring and diagnostic cardiology systems, and related supplies and accessories under the Spacelabs name for use in critical care, emergency, and perioperative areas within hospitals, physicians' offices, medical clinics, and ambulatory surgery centers. The Optoelectronics and Manufacturing segment provides optoelectronic devices under the OSI Optoelectronics, OSI LaserDiode, OSI Laserscan, Semicoa, and Advanced Photonix names for the aerospace and defense, avionics, medical imaging and diagnostics, biochemistry analysis, pharmaceutical, nanotechnology, telecommunications, construction, and homeland security markets. It also offers electronics manufacturing services to original equipment manufacturers and end users for medical, automotive, defense, aerospace, industrial, and consumer applications under the OSI Electronics, APlus Products, Altaflex, and PFC names; and LCD displays for medical, industrial, and consumer electronics applications, as well as flex circuits for OEM customers. This segment offers laser-based remote sensing devices to detect and classify vehicles in toll and traffic management systems under the OSI Laserscan and Autosense names; and solid-state laser products for aerospace, defense, telecommunication, and medical applications under the OSI LaserDiode name. The company was incorporated in 1987 and is headquartered in Hawthorne, California.
How the Company Makes MoneyOSI Systems generates revenue through sales of its products and services across its three business segments. In the Security segment, the company earns by selling security screening equipment to airports, government agencies, and commercial enterprises, often supplemented by long-term service contracts. The Healthcare segment brings in revenue from the sale of medical devices and associated maintenance services to hospitals and healthcare providers. In the Optoelectronics segment, OSI Systems profits from manufacturing and selling optoelectronic components and providing assembly services to OEMs. Significant factors contributing to its earnings include its global presence, technological innovation, and strategic partnerships with government bodies and commercial entities to deliver tailored solutions for security and healthcare needs.

OSI Systems Earnings Call Summary

Earnings Call Date:Aug 21, 2025
(Q4-2025)
|
% Change Since: |
Next Earnings Date:Oct 23, 2025
Earnings Call Sentiment Positive
OSI Systems demonstrated strong performance in fiscal '25, with record revenues and growth across key divisions. Despite challenges in the Healthcare division and reduced revenues from Mexico contracts, the company achieved impressive backlog and bookings, improved margins, and strong financial positioning. The outlook for fiscal '26 is positive with significant opportunities anticipated from new legislation and continued global demand.
Q4-2025 Updates
Positive Updates
Record-Breaking Revenue and Growth
Q4 revenues increased by 5% year-over-year, reaching a new record despite a tough comparison. Excluding Mexico contracts and fiscal '25 acquisitions, OSI revenues grew roughly 30% in Q4, demonstrating strong organic demand.
Security Division Success
Security division revenues grew 7.1% year-over-year in Q4, and 14.7% for the full fiscal year, driven by broad-based demand and significant contracts worldwide.
Optoelectronics Division Performance
Optoelectronics division set a new Q4 record with $113 million in revenue, indicating strong demand and stabilization in OEM customer inventories.
Strong Bookings and Backlog
Record year-end backlog of over $1.8 billion with a book-to-bill ratio of approximately 1.0 in Q4, providing excellent visibility into the new fiscal year.
Improved Margins and Cost Management
Gross margin increased to 33.3%, up 120 basis points from the previous year, due to favorable revenue mix and operational efficiencies. SG&A and R&D expenses as a percentage of sales have decreased annually for the past 8 years.
Negative Updates
Healthcare Division Underperformance
Healthcare division experienced disappointing financial performance, impacting consolidated growth, although there are expectations for improvement.
Significant Decrease in Mexico Revenues
Revenues from large Mexico security contracts decreased to $40 million in Q4 from $145 million in Q4 of the prior fiscal year, impacting overall growth rates.
Challenges with Accounts Receivable
Accounts receivable increased to approximately $837 million due to delayed payments from Mexico, affecting cash flow despite expectations for strong collections in fiscal '26.
Company Guidance
During the OSI Systems Fourth Quarter 2025 Conference Call, the company highlighted its strong financial performance, with Q4 revenues rising 5% year-over-year to a record $505 million, driven by a 28% increase in Security division service revenues and a 10% increase in Optoelectronics division revenues. Excluding Mexico-related revenues and fiscal '25 acquisitions, revenues grew approximately 30%, indicating strong organic demand. The company achieved a record non-GAAP adjusted EPS of $3.24, the highest in its history, and ended the year with a backlog exceeding $1.8 billion. For fiscal year 2026, OSI Systems projects revenues between $1.805 billion and $1.85 billion, reflecting a 5.4% to 8% growth, and non-GAAP adjusted EPS in the range of $10.11 to $10.39, representing an 8% to 11% increase. The company attributes this optimistic outlook to robust demand across its Security and Optoelectronics divisions, significant service revenue growth, and substantial opportunities arising from recent U.S. legislation, such as the Big Beautiful Bill Act, which is expected to fund significant security projects.

OSI Systems Financial Statement Overview

Summary
OSI Systems presents a strong financial profile with consistent revenue growth, improved profitability, and a solid balance sheet with low leverage. The company has effectively managed its costs and improved its cash flow position, although continued negative cash flow from investing suggests ongoing capital investments.
Income Statement
85
Very Positive
OSI Systems demonstrates robust growth with a revenue increase from $1.27 billion in the last annual report to $1.69 billion in TTM, a growth rate of 9.77% from the previous year. The gross profit margin stands at 34.2%, and the net profit margin has improved to 11.2%, signaling effective cost management and profitability enhancement. The EBIT and EBITDA margins are 12.5% and 14.4% respectively, indicating healthy operating performance.
Balance Sheet
78
Positive
The balance sheet shows a strong equity position with an equity ratio of 42.3%. The debt-to-equity ratio is low at 0.09, indicating minimal leverage and reduced financial risk. Return on equity is 21.4%, reflecting efficient use of equity to generate profits. The company's liquidity is satisfactory with cash reserves of $95.83 million.
Cash Flow
72
Positive
Cash flow analysis reveals a significant turnaround with the operating cash flow moving to $67.99 million from a negative position in the previous year. Free cash flow also improved, showing a positive trend with a free cash flow to net income ratio of 0.29. Despite this, the cash flow from investing remains negative, indicating ongoing investment activities.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue1.69B1.54B1.28B1.18B1.15B1.17B
Gross Profit577.76M530.46M430.51M424.43M419.92M420.64M
EBITDA242.68M230.72M173.79M167.97M159.23M154.65M
Net Income188.38M128.15M91.78M115.35M74.05M75.25M
Balance Sheet
Total Assets2.08B1.94B1.56B1.44B1.38B1.27B
Cash, Cash Equivalents and Short-Term Investments95.83M95.35M76.75M64.20M80.61M76.10M
Total Debt8.14M521.55M359.57M353.24M277.27M327.00M
Total Liabilities1.20B1.07B829.52M804.73M744.55M696.39M
Stockholders Equity879.33M863.48M726.16M638.42M639.82M572.15M
Cash Flow
Free Cash Flow55.06M-126.93M62.56M33.32M109.56M95.43M
Operating Cash Flow67.99M-87.50M94.81M63.81M139.07M129.18M
Investing Cash Flow-119.15M-37.64M-40.46M-12.67M-34.69M-42.69M
Financing Cash Flow43.88M144.25M-37.17M-64.01M-103.92M-104.73M

OSI Systems Technical Analysis

Technical Analysis Sentiment
Positive
Last Price230.38
Price Trends
50DMA
223.51
Positive
100DMA
218.60
Positive
200DMA
200.83
Positive
Market Momentum
MACD
1.43
Positive
RSI
54.56
Neutral
STOCH
74.50
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OSIS, the sentiment is Positive. The current price of 230.38 is above the 20-day moving average (MA) of 226.43, above the 50-day MA of 223.51, and above the 200-day MA of 200.83, indicating a bullish trend. The MACD of 1.43 indicates Positive momentum. The RSI at 54.56 is Neutral, neither overbought nor oversold. The STOCH value of 74.50 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for OSIS.

OSI Systems Risk Analysis

OSI Systems disclosed 49 risk factors in its most recent earnings report. OSI Systems reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

OSI Systems Peers Comparison

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
77
Outperform
$4.64B50.355.89%14.24%424.78%
77
Outperform
$2.31B35.4911.44%2.46%572.04%
76
Outperform
$3.69B23.2412.12%2.31%48.63%
73
Outperform
$4.82B43.623.78%1.43%-7.23%1278.91%
72
Outperform
$3.88B26.4916.49%11.33%18.47%
66
Neutral
$4.24B69.468.16%6.34%-1.57%
61
Neutral
$35.62B7.50-10.94%1.87%8.86%-10.27%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
OSIS
OSI Systems
230.38
81.55
54.79%
NOVT
Novanta
117.63
-64.91
-35.56%
PLXS
Plexus
138.62
10.84
8.48%
ST
Sensata
33.52
-3.82
-10.23%
TTMI
TTM Technologies
44.50
24.86
126.58%
VICR
Vicor
51.32
12.76
33.09%

OSI Systems Corporate Events

Private Placements and FinancingBusiness Operations and Strategy
OSI Systems Expands Credit Facility to $725 Million
Positive
Jul 2, 2025

On July 1, 2025, OSI Systems announced an amendment to its Credit Agreement, increasing its revolving loan facility from $600 million to $725 million and adding a $100 million term loan, with the credit facility’s maturity extended to July 2030. This expansion enhances OSI Systems’ financial and operational flexibility, allowing the company to support its growth strategy and invest in strategic initiatives, reflecting the confidence of its lending partners and positioning the company for long-term value creation.

The most recent analyst rating on (OSIS) stock is a Buy with a $160.00 price target. To see the full list of analyst forecasts on OSI Systems stock, see the OSIS Stock Forecast page.

Executive/Board Changes
OSI Systems Announces Leadership Change in Optoelectronics
Neutral
May 28, 2025

On May 27, 2025, OSI Systems announced that Manoocher Mansouri, the President of its Optoelectronics and Manufacturing division, will retire from his position on June 30, 2025, but will continue as Chief Technology Officer. Paul Morben, currently the President of OSI Electronics, will succeed him as Opto President starting July 1, 2025.

The most recent analyst rating on (OSIS) stock is a Buy with a $160.00 price target. To see the full list of analyst forecasts on OSI Systems stock, see the OSIS Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 02, 2025