Synaptics (SYNA, Financial) posted mixed results for the recently reported quarter. The company saw a 27% growth in revenue. However, the company’s sales couldn’t meet expectations. The growth in demand for PCs is expected to drive Synaptics going forward. It is closing down some of its non-yielding offerings. Also, Synaptics has recently closed the acquisition of Renesas SP Drivers as a transformational effort which is expected to strengthen its market position.
Why the acquisition is important
It is having great expectations with the RSP’s advanced display driver solutions. Further with a broad portfolio of these products, Synaptics is expecting an impressive increase in its addressable market opportunity. This will lead the company to hold a competitive position in the market. Besides this, Synaptics is also expecting to hold a leadership position in the touch and DDIC products. Moreover, by merging RSP’ products, technology and engineering know how are expected to be a key growth driver for the company in the days to come.
This will help Synaptics to gain market share. This will also strengthen its position in the mobile market as these products will accelerate its high performance cost effective touch and display driver integration. This will drive company’s sales further.
Opportunities ahead
Its display and touch performance is seeing good opportunities in the mobile segment. Synaptics is in the forefront with TDDI integrated display designs. This is creating greater demand for smart display. This is also benefiting the OEMs in a long run as with this, OEMs will benefit from thinner and brighter display also improving the touch performance. This is expected to improve its smartphone shipments to about 40% in the company quarters.
Synaptics is seeing good demand and opportunities for its products. Its ClearPad Series 4 TDDI solution, providing advanced display noise management and one of the best capacitive sensing performance is seeing good response from the market. Seeing this robust traction Synaptics is expected to launch several other TDDI solutions in the coming quarters. Moreover, Synaptics is also focusing on markets in China. It is aiming on Chinese OEMs which is expected to improve its market share in future. Its display technology is now days being used in some of the leading smartphones such as Huawei, ZTE, OPPO, MEIZU, Gionee and Lenovo.
Synaptics is also working closely with Microsoft as its leading partner for the precision TouchPad for Windows 10. This can be a good long term prospect for Synaptics which can further drive its market share in future.
Conclusion
Looking at the fundamentals, the stock is expensive with a trailing P/E of 64.51, while its forward P/E of 9.98 shows earnings growth. Considering the valuation levels and statistics, the company can be a good long term holding. So, investors seeking long term benefits can include the stock in their portfolio.
