OSI Systems, Inc. (OSIS)
NASDAQInformation TechnologyHardware, Equipment & PartsSnapshot 2026-09-04
$204.15-1.20%
Close 2026-09-04 · 1-day change
NASDAQInformation TechnologyHardware, Equipment & PartsSnapshot 2026-09-04
Warn: Primary pillar under pressure — Operating income stabilizes above $53 million in Q3 2026: Operating income $74.1M vs $53M target.
OSI Systems wins big contracts boosting revenue growth. Revenue grew from $344M in 2025-Q1 to $453M in 2026-Q3. The company reaffirmed EPS guidance near $10.5 for fiscal 2026. Valuation is cheap compared to peers with a PE of 23 versus 39.
Operating income fell from $73M in 2025-Q4 to $53M in 2026-Q3, showing weak profit growth. The recent selloff and soft guidance signal risks. Revenue growth is modest at 2% year over year, below analyst expectations.
The price is about 0.4% below our $224 fair value. Analysts expect 7.7% revenue growth, which aligns with company guidance. Our view is cautious given soft profit trends and recent market stress.
Breaks if: EPS guidance cut below $10 next fiscal year
Breaks if: Operating income falls below $50 million next 4 quarters
This is not a price target or investment advice.
A long-form read on the 1–3 year hold thesis. It updates when the weekly evidence changes.
This investment represents a durable compounder with a focus on revenue growth and operational improvements. The current thesis is intact, supported by recent earnings beats and a share buyback announcement, although risks remain elevated.
The market currently prices OSIS as cheap compared to its peers, reflecting a justified valuation. There is a negative expectations gap, indicating that investors may be cautious about future performance due to the company's fragile earnings quality.
Management is on track with priorities to increase revenue growth and improve cash flow, with recent results showing strong cash generation. However, operating income growth is mixed, which could limit overall profitability in the near term.
The long-term thesis hinges on management's ability to maintain revenue growth and improve operating income. Key factors include potential guidance cuts and the performance of sector bellwethers, as well as macroeconomic conditions like interest rate changes.
The most important moves since the prior daily snapshot.
Mixed, the news cuts both ways. The latest earnings beat supports the read on OSIS. However, guidance issues raise concerns about future growth.
as of 2026-09-04
Review the evidence to watch, what would become a concern, and what would make it less concerning.
Not investment advice. Scores describe historical and current data; they are not forecasts of future returns. Consult a licensed advisor before making investment decisions.
Improve operating income and margins across divisions despite external challenges, focusing on operational improvements and profitability.
Stated as a priority in 4 of last 4 quarters. Operating income remained stable, $217.5 million in 2025-Q4 to $219.0 million in 2026-Q4. Healthcare division margin improved significantly from 1% to 10% in 2026-Q4. Management's focus on operational improvements and profitability shows delivering progress, though overall operating income growth is limited.
“CEO: 'Security division delivered strong profitability...Healthcare division operating margin improved to 10%.'”
“CEO: 'Security division strong bookings and operating margin expansion.'”
“CEO: 'Optoelectronics division achieved operating margin expansion.'”
“CEO: 'Operational improvements implemented throughout the year improving margins.'”
Breaks if: Revenue falls below $1.7 billion in FY26
Focus on growing revenues across Security, Optoelectronics & Manufacturing, and Healthcare divisions with strong backlog and opportunity pipeline.
Stated as a priority in 4 of last 4 quarters. Fiscal year 2026 revenues grew from $1.713 billion in 2025-Q4 to $1.786 billion in 2026-Q4, a 4% increase. The backlog remained strong at approximately $1.9 billion in 2026-Q4. Management consistently emphasized revenue growth supported by backlog and opportunity pipeline, indicating delivering progress on this priority.
“CEO: 'Record Fiscal Year 2026 Revenues of $1.79 billion...substantial backlog of $1.9 billion.'”
“CEO: 'Record Q3 revenues of $453 million...substantial backlog of $1.9 billion...robust pipeline.'”
“CEO: 'Record Q2 revenues of $464 million...significant backlog and opportunity pipeline.'”
“CEO: 'Fiscal 2026 was a strong year...solid bookings...substantial backlog and opportunity pipeline.'”
Breaks if: PE rises above 30 without earnings growth
In the next 1 to 3 years, OSIS's performance will depend on its execution and external market conditions. Not investment advice.