NEW YORK (TheStreet) -- Shares of Himax Technologies  (HIMX - Get Report) plunged 9.64% to $6.75 in morning trading Tuesday after Bank of America/Merrill Lynch downgraded the stock two notches to "underperform" from "buy" and sliced its price target to $7.

The firm cited concerns about Chinese market share, Samsung LCD phone sales, and limited LCoS microdisplay-related news from Google  (GOOG) and Microsoft  (MSFT).

The downgrade comes just two months after Bank of America/Merrill Lynch named Himax its top 2015 pick among display IC vendors.

Bank of America/Merrill Lynch's downgrade comes one day after Northland Securties issued a cautious note to say that Himax's first-quarter results could be at the low end of guidance. The firm cited concerns about Chinese smartphone driver IC sales and a partial shift at Samsung to OLED phone displays from LCDs.

Separately, TheStreet Ratings team rates HIMAX TECHNOLOGIES INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate HIMAX TECHNOLOGIES INC (HIMX) a BUY. This is driven by multiple strengths, 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 revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • HIMX's revenue growth has slightly outpaced the industry average of 10.6%. Since the same quarter one year prior, revenues rose by 16.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • HIMX's debt-to-equity ratio is very low at 0.28 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, HIMX has a quick ratio of 1.51, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has significantly increased by 1367.78% to $38.68 million when compared to the same quarter last year. In addition, HIMAX TECHNOLOGIES INC has also vastly surpassed the industry average cash flow growth rate of -16.03%.
  • HIMAX TECHNOLOGIES INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HIMAX TECHNOLOGIES INC increased its bottom line by earning $0.39 versus $0.35 in the prior year. This year, the market expects an improvement in earnings ($0.43 versus $0.39).
  • You can view the full analysis from the report here: HIMX Ratings Report