Please ensure Javascript is enabled for purposes of website accessibility

Why Himax Technologies Stock Sank 35.7% in March

By Keith Noonan – Apr 8, 2020 at 11:39AM

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

The semiconductor stock is still up roughly 11% year to date despite steep sell-offs last month.

What happened

Shares of Himax Technologies (HIMX 0.50%) plunged 35.7% in March, according to data from S&P Global Market Intelligence. The imaging-focused semiconductor stock had climbed roughly 60% across January and February's trading, but uncertainty brought on by the coronavirus pandemic prompted a steep decline for its share price last month. 

^SPX Chart

^SPX data by YCharts.

Himax had seen strong momentum as investors banked on the company supplying display-driver chips for use in augmented-reality (AR) glasses and headsets, but bearish sentiment on the stock set in last month as the economic outlook became less clear. 

Augmented reality glasses.

The view through AR glasses. Image source: Getty Images.

So what

Himax has been faced with declining demand and pricing power for its display-driver solutions for mobile phones and televisions. But the promise of new business avenues in potentially high-growth product categories including AR hardware and heads-up displays (HUDs) for automobiles has bolstered the bull case and given hope to shareholders. The company still has paths to growth in AR and automobile HUDs, but the likelihood of lasting economic impacts stemming from the coronavirus pandemic suggests that shareholders will have to wait longer for these positive business catalysts to pan out. 

Now what

Himax stock has regained some ground this month amid momentum for the broader market. The company's share price is up roughly 10% in April's trading so far. 

^SPX Chart

^SPX data by YCharts.

Himax published a press release on April 3 outlining preliminary results for its March quarter. The company reported estimated first-quarter sales of $184.6 million, up 5.5% sequentially and 13% year over year. Gross margin for the period came in at approximately 22.7%.

The company's adjusted earnings per diluted American depositary share are projected to be approximately $0.022, beating the company's guidance in a range of a loss of $0.005 to a profit of $0.018 per share. It will report official first-quarter results in May.  

Himax is valued at roughly 16.5 times this year's expected earnings and 0.6 times expected sales.

Keith Noonan owns shares of Himax Technologies. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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.
HIMX
$5.00 (0.50%) $0.03

*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 analyst team.

Stock Advisor Returns
327%
 
S&P 500 Returns
105%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/27/2022.

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

Premium Investing Services

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