Himax Technologies (HIMX) Stock Gains on Analyst Upgrade

NEW YORK (TheStreet) -- Shares of Himax Technologies (HIMX) were gaining 7% to $7.47 Wednesday after Bank of America/Merrill Lynch upgraded the semiconductor company.

The analyst firm upgraded Himax to "buy" from its previous rating of "underperform," setting a price target of $8.50 for the company.

Analyst Daniel Heyler expects Himax to rebound in the second half of 2015 and in 2016. The analyst said smartphone demand in China is improving which will help the company. Heyler also said Himax's display driver IC sales will benefit from an inventory restocking and an improved mix.

Heyler also said 4KTV driver sales could account for up to 20% of large-panel driver shipments by the first half of 2016.

About 2.1 million shares of Himax were traded by 10:42 a.m. Wednesday, compared to the company's average trading volume of abut 2.6 million shares a day.

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 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 largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and solid stock price performance. We feel its 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 debt-to-equity ratio is very low at 0.27 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 1.53, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • HIMX, with its decline in revenue, slightly underperformed the industry average of 0.6%. Since the same quarter one year prior, revenues slightly dropped by 8.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • HIMAX TECHNOLOGIES INC's earnings per share declined by 22.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings 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. For the next year, the market is expecting a contraction of 24.9% in earnings ($0.29 versus $0.39).
  • You can view the full analysis from the report here: HIMX Ratings Report

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