When Himax Technologies Inc. (NASDAQ:HIMX) traded a below $2.90 on May 24, the stock may have marked a bottom. Roth Capital’s upgrade for Himax stock started a rally but investors should ask if the company is investable.
Himax forecast second-quarter revenue growing 2% - 7% sequentially (Q/Q) but it will still lose $035 - $0.02 a share. Gross margin will also fall due to higher material costs and falling WLO shipments. In past quarters, WLO offset the drop in its other weak segments.
3D sensing continues to face high capital costs. Himax invested in new building and equipment to support the business but this is not paying off yet. It also needed a WLO capacity expansion and installation of active alignment capacity to support its 3D sensing business. Indirectly, Qualcomm’s (NASDAQ:QCOM) settlement with Apple (NASDAQ:AAPL) may help revive the partnership on 3D sensing development.
Himax said its 3D sensing projects covering structured light and time-of-flight are ongoing. Near-term, Android smartphone makers are delaying its implementation due to its high cost, long development lead time, and the lack of killer applications. For now, fingerprint technology is good enough to support phone unlock and online payment. The company re-evaluated its positioning with 3D and is working on SLiMTM 3D sensing total solution. By covering more use cases, Himax may have a better chance of signing initial deals.
Your Takeaway
Himax has no initial orders for 3D which increases the chances that the company will disappoint investor expectations again. Consider waiting for contract wins before chasing the stock after the most recent rally.
Tech Insider
