Synaptics EPS, Sales Seen Accelerating In Fiscal Q1
By PATRICK SEITZ, INVESTOR'S BUSINESS DAILY
Posted 10/23/2013 03:31 PM ET
Touch interface technology provider Synaptics (SYNA) is expected to post its third straight quarter of accelerating sales and earnings growth late Thursday, when it reports results for its fiscal first quarter.
Analysts polled by Thomson Reuters expect Synaptics to earn $1.23 a share excluding items, on sales of $219 million, for the September quarter. That would translate to year-over-year growth of 232% for EPS and 72% for sales. It also would mark the company's third straight quarter of double-digit sales growth and double- or triple-digit earnings growth.
For the December quarter, Wall Street is targeting Synaptics to earn 97 cents minus items, up 83%, on sales of $209 million, up 46%.
San Jose, Calif.-based Synaptics is the leading provider of touchpads for notebook computers and has diversified into touch-screen technology for smartphones and tablets.
Synaptics stock has been on a tear lately, up about 75% year to date, touching an all-time high of 56.50 intraday on Friday. In early afternoon trading, Synaptics stock was down 2%, near 52.60, in the stock market Wednesday.
Given the runup in its stock price, Wedge Partners analyst Brian Blair expects that Synaptics investors will begin taking profits after the Q1 earnings report and await a better read on early 2014 prospects.
"We believe it's prudent to take the sidelines on Synaptics given the seasonal downshift coming in mobile device volumes," he said in a research note Monday. "The company continues to see smartphone and tablet units grow, but heading to the end of the year, we expect the coming months' decline in builds to cause Synaptics to take a breather.
"A 10% to 15% decline would be within normal range, post holiday, but we believe investors should wait for supply chain insights when the calendar turns."
Pacific Crest Securities analyst John Vinh says the outlook for Synaptics has improved since the company announced plans earlier this month to buy a fingerprint-reader firm to expand its technology portfolio. It agreed to buy Validity Sensors for at least $92.5 million in cash and stock. The value could reach $255 million with performance incentives. The acquisition is expected to close this quarter.
"Given Synaptics' saturation in the high-end smartphone market, we view the Validity acquisition as a great opportunity as its fingerprint-sensing solutions expand the dollar content in smart devices," Vinh said in a research note Tuesday.