In a research report published this morning, Oppenheimer analyst Andrew Uerkwitz reiterated a Perform rating on InvenSense (NYSE:INVN), as the company reported fiscal third-quarter results, posting revenues/EPS of $115.9M/$0.21, which were slightly better than Oppenheimer’s $113M/$0.19E and Street’s $112M/$0.20E. The company also guided revenues ($95-98M) above Street ($92M). No price target was provided.

Uerkwitz explained, “We view the company entering a transitional period. INVN has executed well to gain new customers but has struggled to maintain gross margin. For gross margins to move back toward historic norms (51-53%), we believe integration (gaining bigger share of BOM) is key. To this effect, we believe the company is 3-4 quarters away from seeing material traction. Until then, gaining share in discretes (such as OIS and MEMs Microphones) should help slow GM degradation. We stay sidelined until we get better clarity on ramp timing.”

The analyst added, “We like the strategy of moving deeper into the guts of devices and offering differentiated integration solutions. However, we expect material contribution to be several quarters away. We keep our FY16E EPS of $0.57 unchanged and wait to get more constructive once we get clarity on timing of strategic story.”

InvenSense, Inc. designs, develops, markets, and sells micro-electro-mechanical system (MEMS) gyroscopes for motion tracking devices in consumer electronics.