Himax (HIMX) News Suggests Google (GOOG) Looking at Different Direction for Google Glass, Chardan Capital Says; Sell the Stock
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Chardan Capital Markets analyst Jay Srivatsa reiterated a Sell rating and $5 price target on Himax Technologies (NASDAQ: HIMX) after Google (NASDAQ: GOOG) decided not to exercise its previously issued purchase option to make an additional investment in the company.
"We believe Google's lack of further investment is a sign that production ramp of Google Glass is unlikely to occur anytime soon", Srivatsa said.
He believes Google is possibly looking to go a different direction with its Glass initiative after the company, Qualcomm and some private equity firms announced that they are investing $542 million in Magic Leap Inc., a visual display company near Miami. "With the backlash over Google Glass coupled with limited interest amongst consumers, we believe Google may be looking to take this project in a different path and could abandon Google Glass in its current form. This could be a negative for HIMX which has spent the past year and half working with Google in enabling the Google Glass come to fruition."
Srivatsa suggests investors should sell Himax and take their money elsewhere. "With uncertainty over Google Glass and Q4:14 outlook for the company, we would encourage investors to sell the stock and take their money elsewhere," he said. "Keeping fair value metric at 10x FY:15 earnings, trading at 16x FY:15 earnings, we view HIMX to be overvalued."
Shares of Himax Technologies closed at $8.02 yesterday.
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