Baird upgraded OmniVision Technologies Inc a notch to outperform on indications that the company's camera sensors will be used in the next version of Apple Inc's iPad tablet.

Apple is hosting a media event on Wednesday where it is expected to unveil a faster and better-equipped iPad to withstand competition from rivals such as Inc .

OmniVision shares were up 8 percent at $17.09 in early trade on the Nasdaq.

The brokerage said the digital imaging products maker is expected to supply a 5 megapixel sensor for the rear camera and a 1 megapixel sensor for the front camera of the iPad3.

It also said Omnivision may supply sensors for an upcoming iPad mini.

Baird, which raised its price target on the stock to $23 from $19, expects the iPad contract to more than offset the losses from a recent cutback in orders at Omnivision.

In November, OmniVision had reported an unexpected cutback in orders, sparking worries that it had lost the contract to supply its sensors for Apple's iPhone 4S to Sony Corp <6758.T>.

Baird expects Sony to remain the rear-camera supplier of the iPhone5, but believes OmniVision could be a potential second supplier.

(Reporting by Chandni Doulatramani in Bangalore; Editing by Sreejiraj Eluvangal)