Oppenheimer’s Take on Himax Technologies, Inc. (ADR) (HIMX), JPMorgan Chase & Co. (JPM) and Cyberark Software Ltd (CYBR)


Himax Technologies Falling Behind Competitors

While hopes were high that 3D sensing could lift Himax Technologies, Inc. (ADR) (NASDAQ:HIMX), it is becoming clear that the company is losing its edge on multiple levels. Analyst Andrew Uerkwitz of Oppenheimer pointed to a number of areas that are causing the company to stumble, including: new display designs, changes in the China mobile market, and the advancement of 3D sensing. The analyst believes that these factors, among others are key to projecting near to mid-term expectations.  In light of these new worries, Uerkwitz sees cause to downgrade the stock from Perform to an Underperform rating while introducing a new price target of $4, which represents a 50% downside from current levels.  (To watch Uerkwitz’s track record, click here.)

Uerkwitz believes that as the TDDI (touch and display integration) market shifts to 18:9 screens with a 37% penetration of 2018, “HIMX is lagging competitors winning new designs […] we expect Synaptics, Novatek, and FocalTech to take the majority of the TDDI market in the next 12 months.” Furthermore, considering that OLED panel shipments are forecasted at 60% growth in 2017 and expected to reach 50% penetration by 2020, “We don’t expect HIMX to win OLED driver IC (DDIC) business from Samsung anytime soon,” Uerkwitz opined.

In regard to 3D sensing, which was long seen as Himax’s silver lining, the analyst does not believe that the company is ready for the serious competition ahead. Uerkwitz writes that although 3D does have the potential to spur growth, “the Street is overestimating the opportunity in units and ASP […] Himax does not have a clear technology lead.” In short, in either 2017 or 2018 the 3D sensing technology will not boost Himax’s position on the market.

Uerkwitz writes, “We’ve always had an appreciation for Himax. However, it is too difficult to ignore both the gap between our expectations and the Street’s as well as the company’s history of over-promising and under-delivering.”

TipRanks analytics indicate HIMX as a Buy. Out of 4 analysts polled by TipRanks in the last 3 months, 3 are bullish and 1 is bearish on Himax stock. The consensus target price stands at $8, revealing a 1% downside from current levels.

JPMorgan Chase Radically De-Risked Balance Marks Strong Trends

There is no question that JPMorgan Chase & Co. (NYSE:JPM) is experiencing very strong trends for 2Q17. Analyst Chris Kotowski of Oppenheimer analyzes a number of factors like PPE, credit quality and core ROTCE, which place the company as “an outstanding long-term holding and will likely outperform the broader market.”

Kotowski mentions that a significant revenue driver is the recent release of the Chase Sapphire Reserve card, which has helped restore falling credit card fees from $0.9 back up to $1.2 billion after the fees had dropped from $1.4 billion. The analyst noted that “This is stronger and sooner than we expected and should be an ongoing annuity.” Moreover, Kotowski found that pre-provision earnings were a half billion dollars more than expected, representing a rise 2.2% per year, which on the surface is not so impressive. However, “in the context of a 13.6% Y/Y decline in trading revenues,” the numbers are looking good. 

The next big growth factor that Kotowski highlights the company’s outstanding credit quality, that has dipped a near half billion from $7.7 to $7.2 billion or just 0.8% of loans. The analyst chimed in that “While we don’t expect it to stay this low, we do believe that these results reflect a radically de-risked balance sheet relative to historical norms.” Kotowski emphasizes the significance of this considering that “NCOs were stable with the core rate of the past year.”

Despite second-quarter EPS coming in at $1.71, beating out consensus of $1.58 and Kotowski’s own estimate of $1.50, the analyst maintains a Perform rating on JPM stock. The analyst opined “for the time being we continue to believe that BAC (Bank of America and C (City Group) are the best risk/reward among the universal bank group.” (To watch Kotowski’s track record, click here.)

TipRanks analytics indicate JPM as a Buy. Out of 8 analysts polled by TipRanks in the last 3 months, 4 are bullish and 4 are neutral on JPM stock. The consensus target price stands at $96.14, revealing a 4% upside from current levels.

Cyberark Software Struggling With Market Strategy 

While Cyberark Software Ltd (NASDAQ:CYBR) revenues continue to rise 13.5% year over year, the company has pre-announced disappointing expectations for revenues to fall about $4-5 million below company guidance, which stood between $61-62 million. In reaction, investors ran for the hills, sending shares crashing 16% Friday. Top analyst Shaul Eyal of Oppenheimer blames these weak results primarily on “elongated sales cycle associated with several large European deals.”  Considering that the company is running forward via an entirely channel-driven market strategy, the analyst questions if Cyberark should rework its approach.

Over the last several years the Privileged Access Management (PAM) market has seen an impressive growth of 20%. However, considering the noticeably weak performance in Q1, Eyal questions “whether the Privileged Access Management (PAM) market is decelerating […] or if the greenfield opportunity is still alive.” If the latter is correct, then the analyst suggests that continuing efforts to shake up regional leadership might present new opportunities. Furthermore, Eyal noted that even if such opportunities should arise, “the complexities of such an additional security layer could drive a longer customer education and implementation phase, potentially creating temporary bumps.”

Eyal is lowering CYBR revenue estimates for 2017, 2018 and 2019 as he already expects 2Q License revenue to hit around $30 million, $5 million under his original forecast. For 2017, the analyst is pulling back on revenue expectations from $270.1 million down to $252.7 million while also dialing down on EPS, cutting from $1.21 to $1.01. For 2018, the analyst is lowering his revenue forecast from $329 million to $291 million while also slicing EPS from $1.51 to $1.21. Likewise, the analyst’s estimates for 2019 also get a chop, with Eyal slashing revenue from $385 million to $326 million and EPS from $1.87 to $1.44.

“While clearly a disappointment, we still see the PAM market as driven by greenfield opportunities,” states Eyal, who reiterates an Outperform rating on CYBR stock, while lowering the price target from $60 to $51, marking a near 20% upside from current levels. (To watch Eyal’s track record, click here.)

TipRanks analytics indicate CYBR as a Buy. Out of 11 analysts polled by TipRanks in the last 3 months, 4 are bullish, 6 are neutral and 1 is bearish on CYBR stock. The consensus target price stands at $49.75, revealing a 16% upside from current levels.