Himax Technologies, Inc. (ADR) (NASDAQ:HIMX) has Oppenheimer analyst Andrew Uerkwitz musing nostalgically about the Taiwanese fabless semiconductor firm whose hyper growth prospects have yet to ever show up to the table.
Is it simply “Déjà vu all over again?” when management spoke of 3D sensing total solutions various quarters past? Uerkwitz finds it difficult to trust this company’s word and cannot help poking holes in this alleged 3D sensing opportunity when revenue remains elusive. Now that there is a danger of new rivals springing up in China, even Himax’s leading share of the market with Chinese OEMs no longer holds the same glimmering promise.
This becomes a case of unrealized irons in the fire: “What emerges is a consistent track record of high expectations set by management for CMOS, LCoS/WLO, TDDI, and AMOLED DDIC, none of which have yet come to fruition. Instead it was constant goalpost moving or outright missed opportunities.”
In reaction, the analyst continues to run for the hills, reiterating an Underperform rating on shares of HIMX with a $4 price target, which represents a 60% downside from current levels. (To watch Uerkwitz’s track record, click here)
Uerkwitz explains, “We want to be believers this time, but between history, a deteriorating core business, and our checks, we see an over-valued stock with no risk being priced in. In this note we look at the dynamics negatively affecting the company’s DDIC segments, question the 3D sensing opportunity, and look at past growth opportunities that are yet to yield material revenue contribution.”
Ultimately, “We believe euphoria has taken hold and fundamentals are being overlooked despite the history with this name. Based on valuations, we believe investors are overlooking the risks vs. its peer group,” contends the analyst, seeing nothing more than a stock that is “over-promising and eventually under-delivering.”
How does Uerkwitz’s bearish cry measure up against the bullish word of the Street? TipRanks analytics demonstrate HIMX as a Buy. Out of 6 analysts polled by TipRanks in the last 3 months, 4 are bullish on Himax stock while 2 issue a Sell. With a loss potential of nearly 13%, the stock’s consensus target price stands at $8.83.