Synaptics, Incorporated: 5G Stock at Record Levels & Set to Ride Higher

Synaptics Stock Trading at Record Levels

With a market cap of $5.1 billion and customers that include Apple Inc (NASDAQ:AAPL), HP Inc (NYSE:HP), and Dell Technologies Inc (NYSE:DELL), it’s tough to say that Synaptics, Incorporated (NASDAQ:SYNA) is an overlooked 5G stock.

Instead, you could just call SYNA stock an excellent semiconductor stock that’s riding high on a history of great financial results. And thanks to growth in 5G networks and the massive demand for mobile interactive technology (touch, intelligent video, and artificial intelligence) and the Internet of Things (IoT), the company’s outlook is exceptional.

Synaptics, Incorporated started 2021 on a high note, fueled by record gross margins, record personal computer (PC) revenue, and net income and earnings per share near the upper end of guidance.

Going forward, the company’s shift toward IoT products, where it will see higher gross and operating margins, will help it be more aggressive, expand its customer base, and engage in new markets.

All that puts Synaptics, Incorporated in a fabulous position to drive its long-term revenue and earnings growth.

Investors are on board, with Synaptics stock up:

• 74% over the last six months
• 51% year-to-date
• 125% year-over-year
• 227% since bottoming in March 2020

Chart courtesy of StockCharts.com

Wall Street is also on board. SYNA stock may be trading at record levels, but it still has lots of room to run in the near term.

Of the analysts providing a 12-month share-price target for Synaptics, Incorporated, the consensus estimate is $162.82 and the high estimate is $200.00. That implies potential upside for Synaptics stock of approximately 12% to 38%.

Then again, Wall Street analysts are famous for being overly conservative. A 12-month forecast for SYNA stock of $225.00 is certainly reasonable.

SYNA Stock Overview

Synaptics develops intuitive human interface products for electronic devices and products. The company’s products allow people to interact with a huge range of mobile computing, communications, entertainment, and other electronic devices. (Source: “Investor Day 2020,” Synaptics, Incorporated, June 9, 2021.)

You can find its products in smartphones, tablets, PC products, IoT products, and other devices. It’s pretty tough to not bump into an electronic product that has been touched by Synaptics.

Mobile

• Display drivers
• Touch controllers

Consumer IoT

• Audio processors
• Touch/display
• Voice processors
• Video processors
• AI computer vision
• Neural network accelerators

PC

• Video interface
• Pointing devices
• Fingerprint sensors
• Touchpads

Automotive

• Touch controllers
• Display drivers
• Integrated touch and display controllers

Synaptics, Incorporated’s products include “ClearPad,” “ClearView,” “ClickPad,” “ForcePad,” “Natural ID,” “SecurePad,” “TouchButtons,” “TouchPad,” “TouchStyk,” and “TouchView.”

The outlook for the company’s product offerings is robust, with a total addressable market opportunity of $11.0 billion and a serviceable addressable market of $5.0 billion. The company’s serviceable addressable market is expected to expand at a compound annual growth rate of seven percent through 2023.

Strong Q3 Results

Synaptics announced that its revenue for the third quarter of fiscal 2021 ended March 27 came in at $325.8 million, down slightly from the $328.1 million in the same prior-year period. (Source: “Synaptics Reports Third Quarter Fiscal 2021 Results,” Synaptics, Incorporated, May 6, 2021.)

The company reported third-quarter net income of $13.8 million ($0.35 per share), up significantly from the third-quarter 2020 net income of $5.0 million ($0.14 per share).

Its adjusted net income for the third quarter was $79.3 million ($2.03 per share), versus the third-quarter 2020 adjusted net income of $52.3 million ($1.49 per share).

Synaptics also reported record cash flow from operations of $136.4 million.

Business Outlook

Dean Butler, Synaptics, Incorporated’s CFO, said that, for the fourth quarter of fiscal 2021, the company expects its revenue to outperform typical seasonality and its gross margins to strengthen on the heels of marvelous IoT sales growth.

While the company’s backlog is large, outpacing supply availability, its fourth-quarter outlook is tempered by current constraints in the semiconductor supply chains.

For the fourth quarter of fiscal 2021, the company expects to report revenue in the range of $310.0 to $340.0 million. That represents year-over-year growth of 11.5% to 22.5%.

Analyst Take

You might not be familiar with the name Synaptics, Incorporated, but you probably use its products every day. That’s assuming you use a laptop, PC, appliances, vehicle, “iPhone,” or IoT products.

Because of the company’s market penetration and continued growth in the mobile and IoT sector, Synaptics stock’s outlook over the coming years is solid.