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Himax (HIMX) Q4 Interim Results Indicate Uptick in IC Demand

Zacks Equity Research
·4 min read

Himax Technologies HIMX recently reported preliminary fourth-quarter 2020 results. The company anticipates revenues to be $275.8 million, indicating sequential growth of 14.9% from a rough 10% rise guided on Nov 12.

Revenues are now expected to jump 57.6% year over year on a strong momentum across all major business segments.

Moreover, Himax projects gross margin to be 31.2%, surpassing the company's original guidance of 29%, hinting at an expansion of 890 basis points (bps) sequentially and a 10.6% increase from the year-ago reported quarter.

Further, earnings on non-IFRS basis are expected to be 19.7 cents per ADS, much better than the previous forecast range of 15.1-16.1 cents. This also implies 169.9% sequential growth and a significant rise from 0.9 cents per ADS in the prior-year quarter.

Shares of Himax were up 6% to close at $7.76 on Jan 7. The stock has returned 107.8% in the past year, outperforming the industry’s rally of 62.7%.

Earnings Estimate Steady

The Zacks Consensus Estimate for the December-quarter earnings currently stands at 16 cents per share, unchanged over the past 30 days and further suggests 1,500% growth from the figure reported in the year-earlier quarter.

Moreover, the consensus mark for revenues is currently pegged at $263.88 million, indicating a 50.85% surge from the number reported in the comparable quarter last year.

Key Factors Likely to Have Impacted Q4 Performance

Himax’s fourth-quarter preliminary results reflect benefits from a rebound in the smartphone market, which led to an uptick in demand for its smartphone TDDI solutions, AMOLED driver ICs and PMIC for 5G smartphones.

Solid demand for high-end monitor and new-generation low-power notebook owing to the coronavirus-led work-from-home and online-learning wave is expected to have triggered the need for Himax’s display driver ICs and timing controllers, which in turn, might reflect on the fourth-quarter top line. Robust demand for tablets also remained a key catalyst.

Moreover, improving display driver demand, diversified customer base and a strong partner ecosystem are likely to have further boosted the company’s revenue base. Notably, the entity is a dominant name in the TFT LCD display driver and timing-controller IC markets.

Recovery in the automotive sector spurred demand for automotive driver ICs, making Himax well-positioned to drive its gross margins and revenues.

Increasing usage of WLO in technologies across nanoimprinting manufacturing and diffraction optics design is a tailwind.

Surging demand for 3D decoder ASICs in 3D Sensing across smartphones, smart door lock, facial recognition-based e-payment, business access control and biomedical inspection device holds promise.

Strength in Himax’s WiseEye technology across notebook, TV, doorbell, door lock and air conditioner end-markets is noteworthy. Also, the company’s 8K TV display drivers and timing controller ICs witnessed a robust adoption.

Momentum for its CMOS image sensors across IP camera and notebook is expected to have contributed to fourth-quarter revenues. Markedly, Himax offers 2-in-1 CMOS image sensor, which supports RGB mode for video conferencing and an ultralow power AI mode for facial recognition. The solution is increasingly being utilized in the latest sleek, slim laptops.

Zacks Rank & Other Key Picks

Himax currently carries a Zacks Rank #2 (Buy). Some other top-ranked stocks in the broader sector are Teradata Corporation TDC, Shopify SHOP and Micron Technology MU, all flaunting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Micron, Teradata and Shopify is currently pegged at 12.3%, 16.1%, and 32.5%, respectively.

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