What happened
Shares of Himax Technologies (HIMX +2.40%) soared 177.8% across 2020's trading, according to data from YCharts. The semiconductor specialist's stock enjoyed impressive gains thanks to resurgent demand for its core display drivers and signs of other potential growth opportunities on the horizon.
Himax's display driver chips are used to regulate the colors shown by pixels on mobile, television, and automotive screens, and rising demand powered a dramatic rebound for the stock. Even after its impressive gains in 2020, the company's share price is still down roughly 32% over the last three years.
Image source: Getty Images.
So what
Himax's last quarterly report delivered blockbuster results and signs that the business is experiencing a rebound. The company's sales climbed 46% year over year to reach $239.9 million, and adjusted earnings per share soared 281.6% year over year to reach $0.07. A stronger mobile upgrade cycle is the core catalyst for the improved performance, but the company's display drivers are also seeing relatively strong demand in the television and automotive markets despite some coronavirus-related challenges.
Now what
Himax's business is expected to see continued momentum in the fourth quarter, with management guiding for a sequential sales increase of roughly 10%. Adjusted EPS for the period is projected to come in between $0.15 and $0.16, representing growth of roughly 72% year over year at the midpoint of the target.
In addition to display drivers seeing an uptick, Himax has other intriguing avenues to growth. The semiconductor company has been developing chips for augmented reality, virtual reality, and machine vision, and significant design wins in any of these emerging tech categories could dramatically shift the business' outlook for the better.
Following its huge gains last year, Himax Technologies now has a market capitalization of roughly $1.3 billion and trades at approximately 23 times this year's expected earnings. The company remains a somewhat speculative investment, but the stock still has the potential to deliver explosive gains if some of its growth bets outside of the display driver market pay off.
