UPDATE 1-RESEARCH ALERT-Baird cuts OmniVision to underperform

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Dec 3 (Reuters) - Robert W. Baird downgraded OmniVision Technologies Inc (OVTI.O) to "underperform" from "neutral," saying it expected the semiconductor image sensor devices maker's cash position to worsen.

"We expect OmniVision to continue to lose share in both video graphics array (VGA) and higher-resolution sensors, as the company is neither the price nor the technology leader," said the brokerage in a note to clients.

The brokerage, which also cut its price target on the stock by more than half to $3, said OmniVision's losses would be driven by continued competition from "Asia-based ultra-low-cost competitors".

Baird said the company's CMOS image sensor continued to have overcapacity from decommissioned 200mm Dynamic Rapid Access Memory, slowing end-demand market and softening mobile phone market in China's, in which OmniVision has high exposure.

Analyst Tristan Gerra said it would be very challenging for OmniVision to fully replace lost VGA revenues with higher-resolution sensor revenues.

Shares of OmniVision, which have lost more than a quarter of their value so far this year, closed at $5.48 Tuesday on Nasdaq. (Reporting by Vidya L Nathan in Bangalore; Editing by Jarshad Kakkrakandy)