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Why Himax Shares Are Slipping From a Multiyear High Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Himax Technologies (NASDAQ: HIMX  ) were up by much as 16% in early morning trading -- touching levels not seen since before the financial crisis -- after the company released a strong earnings report last night. However, the premarket release of second-quarter guidance seems to have undone much of the optimism, and shares have slipped to a far more modest 4% gain.

So what: Himax's first-quarter revenue clocked in at $175.7 million, a 5% year-over-year growth rate and ahead of the $173.8 million analysts were expecting. Adjusted earnings of $0.09 per share also beat Wall Street's consensus by $0.02. The company's forward guidance for the second quarter expects revenue to grow between 17% and 20% against the first quarter, translating into a range of $205.6 million to $210.8 million, and EPS of $0.11 to $0.12. It's hard to say exactly why this would reverse a double-digit pop, as the consensus estimates for the second quarter called for $202.6 million in revenue and $0.10 in EPS, both targets that Himax leapt over.

Now what: The market could just be a bit skittish at a multiyear high -- Himax shares have gained over 200% in just the past six months. The company even made the smart move of suspending its share repurchases as prices soared, so roughly half of its $25 million share repurchase allocation remains unused. Himax isn't a cheap stock; both P/E and price-to-free-cash-flow are nudging around a range of 40 to 45, so you may want to simply hold on for the time being (if you've already bought in).

Want more news and updates? Add Himax to your Watchlist now.

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9/23/2016 4:00 PM
HIMX $10.73 Down +0.00 +0.00%
Himax Technologies CAPS Rating: ****