NEW YORK (TheStreet) -- Shares of Himax Technologies (HIMX - Get Report) were gaining 6.1% to $8.24 Tuesday after analyst firm Chardan Capital Markets upgraded its rating for the liquid crystal on silicon (LCoS) microdisplay maker.

Chardan Capital Markets upgraded Himax to "buy" from "sell" in a note to investors, raising its price target for the company to $13 from $4.

The analyst firm said that it believes Himax is supplying its LCoS microdisplays to Microsoft (MSFT) for its HoloLens augmented reality headset with twice as much content as it had for Google (GOOGL) Glass following channel checks. Chardan analysts also believe Microsoft will announce availability for the HoloLens later this month.

About 2.5 million shares of Himax Technologies were traded by 10:17 a.m. Tuesday, compared to the company's average trading volume of about 2.8 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 some important positives, 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.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite 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, underperformed when compared the industry average of 5.2%. 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 24.4% in earnings ($0.30 versus $0.39).
  • You can view the full analysis from the report here: HIMX Ratings Report