Himax Technologies, Inc. (NASDAQ:HIMX) Analysts Just Cut Their EPS Forecasts Substantially

Market forces rained on the parade of Himax Technologies, Inc. (NASDAQ:HIMX) shareholders today, when the analysts downgraded their forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business. Shares are up 8.7% to US$7.53 in the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

Following the latest downgrade, the current consensus, from the four analysts covering Himax Technologies, is for revenues of US$1.2b in 2022, which would reflect a substantial 23% reduction in Himax Technologies' sales over the past 12 months. Statutory earnings per share are anticipated to dive 45% to US$1.41 in the same period. Before this latest update, the analysts had been forecasting revenues of US$1.4b and earnings per share (EPS) of US$1.80 in 2022. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.

Check out our latest analysis for Himax Technologies

Analysts made no major changes to their price target of US$9.90, suggesting the downgrades are not expected to have a long-term impact on Himax Technologies' valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Himax Technologies analyst has a price target of US$15.00 per share, while the most pessimistic values it at US$6.60. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 41% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 19% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 8.4% per year. It's pretty clear that Himax Technologies' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Himax Technologies. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Himax Technologies after the downgrade.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Himax Technologies, including concerns around earnings quality. For more information, you can click here to discover this and the 1 other flag we've identified.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.