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This Chip Maker Is a Solid Investment to Profit From Smartphones

July 27, 2014 | About:

In January, chip creator Synaptics (NASDAQ:SYNA) was being scorned on the Street after blended second-quarter results, and was the subject of a downsize by Oppenheimer because of its high valuation. Slice to the present, and Wall Street analysts now anticipate that Synaptics will hit $100 from its present levels of around $60.

Everybody seems to be charmed with Synaptics' finger impression and touchscreen sensors that are, no doubt supplied to Samsung (SSNLF), displacing the likes of Atmel and Cypress. Truth be told, analyst Rajvindra Gill of Needham goes on to state that Synaptics' unique finger impression business could result in extra earnings of $2.50-$3.00 per share through the following one to two years. Moreover, the center touch business is relied upon to produce EPS of $3.50-$4.00.

The estimates given above look, exceptionally rosy. In the trailing twelve months, Synaptics' earnings per share were a modest $1.59, so we can easily see the measure of earnings upside that is normal going ahead. At the same time will Synaptics have the capacity to justify such elevated requirements? That being said, it may.

The South Korean point

Unique mark sensors are the new rage in cell phones, and Synaptics is doing admirably to take advantage of it in the wake of getting Validity Sensors in October last year. Fruit (NASDAQ: AAPL) made it prevalent however Samsung went one step ahead with the Galaxy S5. Fruit's Touch ID requires a user to press and hold the home-screen catch. Then again, Samsung has made it more easier since the user just needs to swipe vertically across the home catch to use the scanner.

That isn't a major ordeal, however Samsung's Galaxy S5 will permit users to pay through Paypal using a swipe of their finger, which Apple doesn't. Furthermore the biggest arrangement of all - the sales numbers - suggest that the Galaxy S5 has started selling at a noteworthy pace.

As reported by iqmetrix, which sells retail administration software to the North American wireless gadget industry, the Galaxy S5 represented 23% of the aggregate number of phones that were sold in the U.s. amid its dispatch weekend. In Canada, the number was 18%. In comparison, the iphone 5s represented just 18% of the phones amid its dispatch weekend in the U.s., while the performance in Canada was far more detestable at just 13%.

Strength in China

China, as well all know, is the biggest smartphone showcase on the planet. It pays well to have a decent relationship with critical Oems in the area and Synaptics seems to be doing just that. Synaptics' list of Chinese customers is extremely impressive.

These companies could give Synaptics a huge boost going ahead. Actually, Coolpad's piece of the overall industry in China is more than Apple, and it ranks behind just Samsung and Lenovo, all of which are Synaptics' customers. Since, Synaptics enjoys strong relationships with all the heading players in the Middle Kingdom, it seems to be in shaft position to benefit as much as possible from this business sector.


Synaptics is developing fast. Its revenue in the as of late reported second from last quarter was up 25% year over year. Considering this appealing development rate, alongside the way that Synaptics is sitting on some huge opportunities in the smartphone business, its send P/E of just 13 looks way modest. Given the tremendous development in smartphones expected in China and the developing reception of unique finger impression applications in cell phones, Synaptics should have the capacity to satisfy expectations later on.

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