Baird Initiates Himax Technologies (HIMX) at Outperform; Pure Play in Augmented Reality and AMOLED Displays

After the close, Baird initiated research coverage on Himax Technologies (NASDAQ: HIMX) with a Outperform rating and a price target of $9.00, suggesting 46% upside to Thursday's close.

Analyst Tristan Gerra called Himax a pure play on "emerging consumer growth themes including Augmented Reality (AR) and AMOLED displays, along with growth segments including multi-lens optics (array cameras, AR), CMOS image sensors (smartphones, ADAS), and TDDI (Touch Display Driver Integration)."

Gerra believes Himax is engaged with Microsoft's HoloLens project. He notes the number of LCOS suppliers is very limited, while content is high.

The analyst also said AMOLED will eventually be everywhere. "OLED represents the single largest step for image quality improvement in flat displays, providing multiple advantages relative to traditional LCD displays," the analyst said. They expect AMOLED displays to gain momentum in mainstream smartphones and high-end TVs (4K HDR) next year, with OLEDs eventually becoming pervasive in all displays.

Meanwhile, multi-lens optics is a potential holy grail in smartphone cameras. "Multi-lens optics enable low-cost array cameras using a single CMOS sensor," the analyst explains. "Array cameras enable the focus to take place post picture processing rather than at the time the picture is taken."

Field research leads them to believe Himax is in discussions with a leading smartphone IC supplier for multi-lens optics.

Also, in 2016, Himax should also benefit from a supply/demand recovery in display panels, with 4K TVs representing a multi-year catalyst within the large panel market, the analyst said.

For an analyst ratings summary and ratings history on Himax Technologies click here. For more ratings news on Himax Technologies click here.

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