Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why Himax Technologies Skyrocketed 28% in February

By Chris Neiger - Mar 8, 2017 at 7:54PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors were happy with the company's quarterly and full-year revenue jump, along with Himax's optimistic outlook for the rest of 2017.

What happened

Last month, shares of Himax Technologies ( HIMX -2.49% ) popped 28%, according to data provided by S&P Global Market Intelligence. The company reported year-over-year revenue growth of 14.3% in the fourth quarter of 2016, and 16.1% growth for the full year 2016 -- both of which clearly pleased investors.  

Image of stock price graph trending upwards.

Image source: Getty Images.

So what

Investors were likely happy to see the company improve revenue across all of its key product segments in the fourth quarter. Small and medium-sized panel driver revenue increased 21.8%, large-sized panel driver revenue increased 9%, and non-driver sales increased 6%, all on a year-over-year basis.

Himax investors are also looking ahead to the company's long-term potential in augmented reality (AR), which is being fueled by the ramp-up of the company's wafer-level optics (WLO) capacity and its liquid crystals on silicon (LCOS) production. Bullish Himax investors are looking for the WLO and LCOS to boost the company's position in AR starting later this year and into 2018.

Himax CEO Jordan Wu said in a press release that gross margin and earnings per share were below quarterly guidance due to an additional inventory writedown, but that "[n]evertheless, we still delivered solid results to achieve both top and bottom line growth during 2016 as our driver and non-driver business segments both performed strongly."

Now what

Management noted that in the first quarter of 2017 the company is experiencing "weaker seasonality" with its integrated-circuits business and is "anticipating near-term headwinds" for Himax's non-driver business because some of its customers are transitioning to future AR products and ordering fewer of the company's current LCOS and WLO products as a result.

But that shift should actually be a good thing for the company over the long term, and is the reason that Himax's management is ramping up new capacity for WLO and LCOS this year. "After many years of R&D and product development, we may see significant business progress in our non-driver business to contribute to both top and bottom lines out of WLO and CIS areas as early as the second half of 2017," Wu said.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Himax Technologies, Inc. Stock Quote
Himax Technologies, Inc.
$10.17 (-2.49%) $0.26

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/07/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.