5G stock at record highs, but on the verge of climbing higher


Trading in Synaptics shares at record highs

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

Instead, you can simply call the SYNA stock a great semiconductor stock that goes high on a history of great financial results. And thanks to the growth of 5G networks and the massive demand for mobile interactive technologies (touch, smart video and artificial intelligence) and the Internet of Things (IoT), the prospects for the company are exceptional.

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

Going forward, the company’s transition to IoT products, where it will see its gross and operational margins higher, will help it be more aggressive, expand its customer base, and enter new markets.

All of this puts Synaptics, Incorporated in a fabulous position to drive long-term revenue and profit growth.

Investors are on board, with the stock from Synaptics:

  • 74% in the last six months
  • 51% since the beginning of the year
  • 125% year on year
  • 227% since the March 2020 low

Graphic courtesy of StockCharts.com

Wall Street is also in the game. SYNA stock may be trading at record highs, but it still has a lot of wiggle room in the near term.

Among analysts providing a 12-month stock price target for Synaptics, Incorporated, the consensus estimate is $ 162.82 and the high estimate is $ 200.00. This implies an upside potential for Synaptics stock of around 12% to 38%.

Then again, Wall Street analysts are known to be overly conservative. A 12 month forecast for SYNA stock of $ 225.00 is certainly reasonable.

Overview of SYNA actions

Synaptics develops intuitive human interface products for electronic devices and products. The company’s products enable users to interact with a wide variety of mobile, communication, 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 is quite difficult not to come across an electronic product that has been affected by Synaptics.

Mobile

  • Show pilots
  • Touch controllers

Consumer IoT

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

computer

  • Video interface
  • Pointing devices
  • Fingerprint sensors
  • Touch tablets

Automotive

  • Touch controllers
  • Show pilots
  • Integrated touch and display controllers

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

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

Strong third quarter results

Synaptics announced that its revenue for the third quarter of fiscal 2021 ended March 27 was $ 325.8 million, down slightly from $ 328.1 million in the same period of the previous year. (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 sharply from 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), compared to adjusted net income of $ 52.3 million ($ 1.49 per share) in the third quarter 2020.

Synaptics also reported a record operating cash flow of $ 136.4 million.

Business outlook

Dean Butler, Synaptics, chief financial officer of Incorporated, said that for the fourth quarter of fiscal 2021, the company expects revenues to exceed typical seasonality and gross margins to strengthen in the wake of the wonderful IoT sales growth.

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

For the fourth quarter of fiscal 2021, the company expects to generate revenues of between $ 310.0 million and $ 340.0 million. This represents year-over-year growth of 11.5% to 22.5%.

Analyst take

You may not be familiar with the name Synaptics, Incorporated, but you probably use its products every day. This assumes you are using a laptop, PC, household appliances, vehicle, “iPhone”, or IoT products.

Due to the company’s market penetration and continued growth in the mobile and IoT industry, the outlook for Synaptics stock for the coming years is strong.


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