For two consecutive quarters, wearable display supplier Himax Technologies (NASDAQ:HIMX) reported strong results. This suggests that the worst is over for the small-cap firm.
Himax posted Q3 revenue growing 46.1% Y/Y to $239.93 million. The gross margin rose by 280 bps to 22.3%. In Q4, it forecast revenue growth by 10% sequentially. Gross margin of 29% is a strong improvement while diluted EPADS will be 15 – 16 cents. The non-IFRS EPS is the same.
At an annualized revenue of over $1 billion, Himax’s low stock price suggests that investors are doubting its potential. Still, the company canceled its dividend payout in 2019 and has yet to reinstate it. Instead, it will use its dividend savings to continue funding operations and meeting capital requirements to support its future growth.
The company expects TDDI penetration in smartphones, and auto, mainly. As the smartphone refresh to slimmer design unfolds, unit sales should grow. In DDIC display driver integrated circuit), Himax needs higher 4K TV demand. 8K TV is starting to emerge but not at a meaningful pace.
In wafer-level optics (WLO) and 3D sensing, the company will pivot into non-smartphone. For example, payment systems and the smart door lock are two opportunities.
After its rise to above $4.00, consider Himax stock if it falls back to the $3.00 - $3.50 range.
