Himax's Consensus Estimates Could Be 'Out Of Reach,' Chardan's Srivatsa Warns

In a report published Wednesday, Chardan Global analyst Jay Srivatsa maintained a Buy rating on Himax Technologies, Inc. (ADR) (NASDAQ: HIMX), after the company reported 2Q results.

Himax is expected to report 2Q revenues of $172-$175 million, better than its guidance and in-line with the Street estimates. Analyst Jay Srivatsa expects Himax to provide an update on the "strength of the smart phone and 4K TV markets" at its conference call on August 7. "Most importantly, we would be looking for clarity from the company on the LCoS ramp in 2015," Srivatsa added.

In the report Chardan Global noted that following the discontinuation of the Google Glass version 1, Microsoft Corporation (NASDAQ: MSFT) could be in early stages of ordering LCoS display drivers with HIMX.

"Earlier this week, Satya Nadella, CEO of Microsoft commented on BBC that he expects the first developer version of Hololens to be available within the next year. As such, we would be looking for update on HIMX's production ramp status to give us an indication of Microsoft's plans to release the Hololens to consumers in 2016," the report stated.

Jay Srivatsa expects Himax's 3Q15 revenue guidance to miss consensus estimates on the basis of the following factors:

• Reduced demand for big ticket items following a sharp decline in disposable income after a sharp fall in the Shanghai stock exchange.
• Poor or modest revenue growth guidance for 3Q15 by Novatek Microelectronics Corp (TPE: 3034) and MediaTek Inc. (TPE: 2454)
• Also AU Optronics Corp (ADR) (NYSE: AUO) and Innolux have projected a decline in the shipments of large panels.
• After trying to enter the mainstream Chinese market with low-cost smartphones equipped with LCD displays Samsung appears to have decided to move back to AMOLED displays for its smartphones for China.

Pointing out that Himax did not supply AMOLED drivers to Samsung as yet, Srivasta said, "As such, we expect HIMX to guide to 5-10% growth in revenues from Q2:15 revenues, representing Q3:15 revenues in the range of $182 - $190 million, putting it well shy of consensus estimate of $208 million. Sequentially flat gross margin guidance could put non-GAAP EPS of $0.06 - $0.07, shy of street consensus estimate of $0.08."