Synaptics Executing Well On A Higher-Growth, Higher-Margin Model And Not Getting Full Credit

Synaptics (SYNA) is doing what many semiconductor companies struggle to do – meaningfully remaking itself into a higher-margin player in more defensible, faster-growing market segments. Many companies have struggled to successfully disengage from a heavy revenue reliance on Apple (AAPL), and likewise many chip companies have found it hard to transition away from consumer markets where “fast follower” Asian rivals quickly compete away margins. Synaptics, though, has executed on this transition quite well over the last couple of years.

Cheap stocks are all but impossible to find in the semiconductor space today, and there are still significant questions about the growth opportunities in areas like Mobile and PC for Synaptics over the next couple of years. Nevertheless, I do believe the company’s IoT business is set to generate strong growth, and I believe mid-to-high single-digit long-term revenue growth is possible here, and with higher margins.

There’s more modeling risk with businesses in transition/transformation, but I see near-term upside into the $140’s here and longer-term total annualized return potential in the high single-digits.

 

Click here for more: 

Synaptics Executing Well On A Higher-Growth, Higher-Margin Model And Not Getting Full Credit