OSI Systems (OSIS) will likely benefit from major and regular US Customs and Border Protection security and inspection programs and defense initiatives that are reinforcing backlog visibility and adding redundancies to fiscal 2027 and 2028 growth estimates, Oppenheimer said Wednesday in a report.

Oppenheimer said it favors the shares as the drivers of OSI's "long-term sturdy/stable compounding track-record" remain well positioned to continue.

Shares have seen a "notably steep pullback," partly reflecting "previous multiple expansion highs that were perhaps aggressive," Oppenheimer said. Now trading at about 18 times fiscal 2027 estimated earnings per share, the company's "stable of protected growth drivers" appears undervalued, the report said.

OSI's solid fiscal 2027 services growth outlook is supported by a "materially formulaic function of large installed base expansion over recent years," reinforced by high retention, lifecycle service intensity trends, and pricing, the report said.

Oppenheimer has an outperform rating on OSI stock and a $300 price target.

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