Himax Technologies, Inc. (NASDAQ:HIMX) is up by more than 70% for the year on investors taking not of its growth avenues amid strong demand for display-driver circuits. Strengthened investor sentiments on the stock also stem from the company pursuing growth projects around emerging technologies, augmented reality virtual reality, and machine visions.
Growth Avenues
Himax Technologies generates a good chunk of its revenues from the sale of display drivers that regulate colors displayed by pixels on screens. Its chips elicit strong demand as they are used to make phones, tablets, televisions, and other devices.
The company’s valuation has increased significantly owing to the growing confidence of a rebound in display driver sales and the company pursuing new growth avenues and product categories. A 46% year over year increase in sales in the third quarter affirm growth in the company’s major product segments.
Likewise, the company is increasingly benefiting from the work-at-home trends, which are spurring demand for displays. In addition, the ramp of touch and display integration, notably in tablets and automotive, also continues to support the company’s core business. Himax Technologies is also seeing significant growth opportunities on heads-up-display and augmented reality applications.
The company’s performance has mostly been hampered by weakness in the global TV and mobile-device markets. Reduced pricing power for the current display drivers has also taken a toll on the company’s revenue base.
Himax Technologies Outlook
However, the company could see a cyclical rebound as the pandemic is brought under control. The next generation phone adoption driven by the 5G technology is also expected to fuel demand for display drivers.
The company is also seeing momentum in tablet and teleconferencing screens as video communication becomes the new norm as part of the work-from-home trends. Himax Technologies also continues to see opportunities in augmented reality and virtual reality headsets as well as machine vision technologies.
Research firm, Robert Baird, has since increased Himax Technologies' share price target to $6, betting on the ever-improving fundamentals. The opening of the global economy in the aftermath of the pandemic is seen as one development that should continue to support its core business.