NEW YORK (TheStreet) -- Himax Technologies (HIMX) plummeted 6.8% over Tuesday's session, but the small-cap semiconductor is regaining some of its losses on Wednesday. The stock had climbed 2.9% to $13.94 by early afternoon.
A day earlier, the Taiwanese company received a downgrade from Chardan Capital Markets to "neutral" from "buy" with a price target of $12.
Analyst Jay Srivatsa said while many are holding onto the company ahead of the widespread launch of Google (GOOG) Glass, wearable technology for which Himax supplies LCoS microdisplays, competition from its core business could result in flagging sales. Rivals Novatek, Orise and Illitek are currently making market share grabs in Himax's core LCD display drivers division.
On Monday, the stock rallied on reports Samsung had begun working on head-mounted wearable technology and that it might use Himax as a key component supplier.
The Tainan-based business skyrocketed 520% over 2013 after it landed a key contract as the microdisplay supplier to Google Glass.
TheStreet Ratings team rates HIMAX TECHNOLOGIES INC as a Buy with a ratings score of B. The team has this to say about their recommendation:
"We rate HIMAX TECHNOLOGIES INC (HIMX) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 380.33% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, HIMX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- HIMAX TECHNOLOGIES INC has improved earnings per share by 16.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, HIMAX TECHNOLOGIES INC increased its bottom line by earning $0.30 versus $0.06 in the prior year. This year, the market expects an improvement in earnings ($0.36 versus $0.30).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry average. The net income increased by 17.9% when compared to the same quarter one year prior, going from $10.41 million to $12.27 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 5.0%. Since the same quarter one year prior, revenues slightly increased by 1.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Although HIMX's debt-to-equity ratio of 0.27 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.42, which illustrates the ability to avoid short-term cash problems.
- You can view the full analysis from the report here: HIMX Ratings Report