Has OmniVision (OVTI) finally gotten cheap enough?

The company, which makes image sensors used in camera phones, yesterday posted slightly better-than-expected revenue for its fiscal first quarter ended July, but weaker-than-expected profits, along with disappointing fiscal Q2 guidance. The stock traded lower in after-hours dealings last night, but today the shares have staged a robust rally.

That’s a little surprising. Many analysts sharply reduced estimates on the company today, chopping their price targets in the process. But with the stock down 40 percent since late March, investors may have concluded that the stock has suffered and enough, and had dropped about as low as it was going to go.

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You might want to take some money off the table in chip stocks. That’s the advice this morning from American Technology Research analyst Doug Freedman.

He notes that of the 19 companies he follows, 14 have posted gains of 5% to 25% since he upgraded the sector on April 4. (Just two of those stocks–Qimonda (QI) and Omnivision (OVTI)–have declined in the subsequent weeks.) And now, he says, they are due for a four- to six-week pause.

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