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Himax: Long-Term Perspectives Don't Look Promising

Mar. 11, 2018 7:44 AM ETHimax Technologies, Inc. (HIMX)220 Comments


  • Himax has underperformed in 2017 and its shares are already down 20% YTD.
  • For the Q1, Himax expects to have its revenue down 9% to 14% sequentially and forecasts its GAAP earnings per share to be -2 to -3 cents per diluted share.
  • Our analysis shows that Himax’s shares represent a downside of more than 50% from its current market price.

Last year, we wrote two articles that described our doubts regarding Himax’s (NASDAQ:NASDAQ:HIMX) ability to deliver growth, as the company wasn’t making a lot of progress in the last few quarters and its results in Q1 and Q2 of the fiscal year 2017 were signaling that the business might not outperform its previous results. In Q3, Himax has beaten its only analysts’ revenue estimates for the year, but was still down Y/Y. Nevertheless, even with such bad results its stock managed to have a good performance, as the shares were trading around 52-week highs in late November, mainly thanks to the announcement that Himax is working with Qualcomm (NASDAQ:QCOM) on its new 3D sensing technology and thanks to the news that the company has successfully started to deliver wafer-level optics technology to Apple (NASDAQ:AAPL) for its latest iPhone X. However, in December the momentum started to fade, as Himax’s shares once again tumbled to its near 52-week lows and are down more than 20% YTD.

For the Q1 of FY18, Himax expects to have its revenue down 9% to 14% sequentially and forecasts its GAAP earnings per share to be -2 to -3 cents per diluted share. In addition, the company continues to spend vast sums of money on its new WLO building project, as the phase II of its CAPEX plan is about to be announced soon. However, with such a weak financials, we expect the company to struggle to finance all of its upcoming developments with its own resources and believe that it will need to make an additional capital raise from the financial institutions in the future.

Below is a discounted cash model, which we created ourselves and which shows our forecast of the company’s financials for the upcoming years. Since in FY17, Himax fell short on its revenue, there is

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