Or maybe Northland Knows something Himax doesn't

Scraped because I don't want to lose the content. 

Barrons -- Source

Himax Slips as Northland Slashes Microsoft ‘HoloLens’ Estimates

By Tiernan Ray

Shares of display technology vendor Himax Technologies (HIMX) predawn 25 cents, or almost 3%, at $8.50, after Northland Capital Markets’s Tom Sepenzis this morning warned the stock has “little chance of a positive catalyst until the second half of CY17” given a sharp drop-off in revenue from Microsoft’s (MSFT) “HoloLens” device for augmented reality.

Sepenzis maintains his Outperform rating on the shares, and his $12 price target, as the thinks Himax “remains well positioned longer term.”

Microsoft is cutting orders for components for HoloLens as it rejiggers the product, which is still at device mostly for developers to play with:

"AR – We believe that the primary customer is rapidly reducing orders for LCOS and WLO components. This could result in approximately $60 million in LCOS/WLO revenue in CY16, down from an expected $90+ million, and have a significant impact in CY17. Originally pegged at $270 million in potential revenue in CY17, we now expect this customer to drop off almost completely in the first half of CY17 as it looks to refine its AR products. We were modeling $230 million in revenue for AR components in CY17, and we are reducing our estimate to approximately $35 million, back to R&D levels."

He cuts his estimates for Himax for this year to $810.9 million and 41 cents a share in profit from a prior $856 million and 50 cents, and he cuts 2017 numbers to $802 million and 31 cents from a prior $1.06 billion and 79 cents.


Sepenzis is not discouraged, noting that this can happen with emerging technologies:

"While the change in estimates is rather profound in CY17, the primary reason involves the augmented reality business, an area where future sentiment swings wildly from quarter-to-quarter. We continue to believe that this market will eventually develop, and Himax is working with most of the major OEM’s to deliver viable products, so we do expect it to be one of the primary winners once the dust settles. We are therefore not changing our rating or target price at this time. However, we believe the stock will not see any major catalysts until the second half of CY17 when the second major AR device is expected to be delivered."