The Euphoria Around This Google Inc (GOOG) Glass Play Is Overdone

Ignoring the real business

In the midst of this euphoria, it seems like everyone is missing the point: Himax Technologies, Inc. (ADR) (NASDAQ:HIMX) is a great business as its display drivers are present inside monitors, notebooks, TVs, tablets, smartphones, cameras, and many other electronic devices. Himax is also counting on smartphone growth in China, where consumers are moving to smartphones, and this is leading to an increased demand for Himax’s small and medium-sized drivers.

Moreover, sales of its non-driver products, such as CMOS image sensors, touch panel controllers, power management ICs, LED drivers, etc. is also well-positioned to grow. Considering the wide range of products where the company’s products are used, it would undoubtedly be a good buy, but in my opinion, its valuation at present is too high.

The company will need to deliver above-average earnings growth in the future; otherwise its shares might fall closer to reality. The amount of revenue Himax Technologies, Inc. (ADR) (NASDAQ:HIMX) might expect to generate from Google Inc (NASDAQ:GOOG) Glass is still unknown and we’ll have to wait to see the potential impact. Himax is slated to release its next earnings report early next month, and the outlook would certainly give us a few pointers of what to expect going forward.

The bottom line

I’m not advising you to sell Himax Technologies, Inc. (ADR) (NASDAQ:HIMX) at this point as its core business is still strong, and if Google Inc (NASDAQ:GOOG) Glass turns out as lucrative as expected for it then there’s no looking back. However, considering the state of Google Glass now and the optimism around it, Himax shares might fall if the company can’t satisfy the lofty expectations of Wall Street.

Harsh Chauhan has no position in any stocks mentioned. The Motley Fool recommends Google. The Motley Fool owns shares of Google.

The article The Euphoria Around This Google Glass Play Is Overdone originally appeared on Fool.com.

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