Himax (HIMX) Sell-Off Related to Speculation Synaptics to Acquire Renesas Display Driver Business - Chardan Capital Markets

Chardan Capital Markets analyst Jay Srivatsa reiterated a Sell rating and $6 price target on Himax Technologies (NASDAQ: HIMX) following yesterday's 15% sell-off, which he said was related to speculation that Renesas Electronics Corp. (RNECF) plans to sell its majority stake its display driver business to Synaptics (NASDAQ: SYNA). Apple is also said to be in talks about a possible purchase of the 55% stake in Renesas's display driver business which is the sole supplier of display driver chips for Apple's iPhone.

Comments from Srivatsa differ from the view of others, which suggested yesterday's sell-off was related to the view the company may lose Google as an LCOS customer. Still others suggested the pressure in the stock was related to new Intel is teaming with China's Fuzhou Rockchip Electronics.

Commenting on the possible acquisition of Renesas, the analyst said, "It is our view that Synaptics' acquisition of Renesas display driver business will have no near term impact to HIMX but SYNA could become a meaningful competitor to HIMX's Samsung (SSNLF-NR) and China business in the foreseeable future."

He added, "With HIMX struggling from the inventory buildup at Samsung leading to its dismal Q2:14 guidance, we believe the threat of another merchant display driver provider entering the fray could drive further erosion in ASPs and market share loss. Already, Orise (3545.TW-NR) and Ilitek appear to have driven HIMX out of the low end of the smartphone market with aggressive pricing cuts and entry of SYNA could put further pressure on HIMX and Novatek (3034.TW-NR), who are currently dominating the mid-high end of the smartphone segment in China for display drivers."

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

Shares of Himax Technologies closed at $6.62 yesterday.

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