Why BoFAML Lost Interest In Himax Technologies, Inc. (ADR) (NASDAQ:HIMX)?

The stock of Himax Technologies, Inc. (ADR) (NASDAQ:HIMX), display manufacturer, went steeply down after its biggest admirer Bank of America Merrill Lynch projected doubt on its performance. The share of the company tumbled by as much as 10% to $6.74 during the previous day’s trade. The company felt the shock as Bank of America Merrill Lynch downgraded the stock to ‘Sell’ from ‘Buy’ and set its price target at $7.

Do analyst foresee a momentum shift in HIMX?

Absence of high-end products

The downgrade came after the research firm was disappointed with the company’s progress on high-end products. It is to be noted that Merrill was strongly bullish on the company earlier. The ‘Buy’ rating was handed over to the company for its potential to deliver high-end products that tap into upcoming 4G/smartphones and 4K Tv display upgradations, noted the research firm. However, the outlook changed after Himax Technologies, Inc. (ADR) (NASDAQ:HIMX) failed to be a part of any high-end products that were expected to be launched by Microsoft Inc. (NASDAQ:MSFT) or Google Inc (NASDAQ:GOOG).

Samsung’s problem

Further, Analysts Daniel Heyler and Andrew Dong said that Himax Technologies, Inc. (ADR) (NASDAQ:HIMX) could take a hit in its display and driver sales. The reason being its chief client Samsung Electronics facing headwinds in China. The research firm said that the expectations that Samsung will account for 30% of display driver sales in the first quarter of 2015 can actually go wrong with a dramatic fall in demand for Samsung’s LCD-based smartphones. Analysts noted that Samsung’s efforts to regain its lost market share in emerging economies have so far been fruitless. Moreover, softer outlook for OLED phone sales further dampens the prospects for Himax Technologies, Inc. (ADR) (NASDAQ:HIMX).

The research firm said that Himax Technologies, Inc. (ADR) (NASDAQ:HIMX)’s exposure to limited customers is acting against it. It added that the company is lagging in operations focus and is unable to take broad initiatives, which is not desirable.

About the Author

Terrel is US Markets Daily's business news reporter. She joined US Markets Daily after five years as a print reporter.

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