With earnings season in full swing, Brean Capital analyst Mike Burton explains why he remains on the sidelines with semiconductor makers Himax Technologies, Inc. (ADR) (NASDAQ:HIMX) and NVIDIA Corporation (NASDAQ:NVDA). Here is a closer look at Burton’s thoughts on earnings trends from both stocks.
Himax Technologies, Inc. (ADR)
Burton reiterated a Hold rating on shares of Himax Technologies, after the company reported 2016 first quarter financial results, with revenue slightly below Consensus estimates and EPS that was ahead of Consensus by 11%.
Burton noted, “We note that Mar-16Q revenues were negatively impacted by the February 6th earthquake in Taiwan and revenue would have beaten the Street and revenue guidance if HIMX did not experience a delay. While forward guidance for the Jun-16Q, is above the Street, we believe expectations were even higher than Street numbers given the excitement around HIMX’s AR/VR ramp. We are staying consistent with our view of shares of Himax as we are encouraged by the company’s traction in its non-driver businesses going forward as we see additional content in the Oculus and a meaningful upside scenario as Hololens takes off. We are not materially adjusting our estimates and staying at Hold due to valuation.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Mike Burton has a yearly average return of 9.7% and a 53% success rate. Burton is ranked #261 out of 3913 analysts.
Out of the 8 analysts polled by TipRanks, 6 rate Himax stock a Buy, while 2 rate the stock a Hold. With a return potential of 31.5%, the stock’s consensus target price stands at $11.85.
In addition, Burton reiterated a Hold rating on shares of Nvidia, after the company reported April quarter results that solidly beat consensus expectations, sending shares up over 12%.
Burton wrote, “NVIDIA reported solid April 2016 quarter results and July 2016 guidance. The Company continues to execute well and has growth drivers / levers in Tegra (Automotive) and GPUs (Data Center) and more importantly, is expecting a resumption of growth from its Gaming business (largest business segment) driven by its Pascal-based GeForce products in Jul-16Q. We remain on the sidelines at current levels as NVDA is trading near its peak earnings multiple from the last 2 years. We adjust our fair value range to $35-$40 and reiterate our Hold rating.”
Out of the 27 analysts polled by TipRanks, 15 rate Nvidia Corporation stock a Buy, 10 rate the stock a Hold and 2 recommend a Sell. With a return potential of 3.3%, the stock’s consensus target price stands at $36.75.