UBS Cuts Himax Price Target by More Than Half

In a note released Tuesday morning, UBS analyst Samson Hung downgraded shares of Himax Technologies, Inc.

from Neutral to Sell and slashed the price target from $13.70 to $5.60. Hung says Himax's current valuation is "stretched" and sees downside risk in the way of soft demand from China TV year-to-date. He estimates that this weakness could continue into the second half of 2014 and is expecting a "muted" third quarter due to strong restocking demand ahead of the World Cup. Additionally, Hung views the slower transition of smartphone panel resolution from wVGA to HD720 as a headwind for Himax. He notes the slowed transition is connected to the uncertainty of 4G handset demand in China. Shares of Himax are trading down over 4 percent in Tuesday's pre-market session following the UBS note.