Needham & Company Upgrades Synaptics (SYNA) to Buy; Galaxy S4 Winner

March 18, 2013 8:29 AM EDT
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Price: $53.86 --0%

Rating Summary:
    13 Buy, 6 Hold, 1 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 23 | Down: 31 | New: 34
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Needham & Company upgraded Synaptics (NASDAQ: SYNA) from Hold to Buy with a price target of $52, saying significant design wins and share gains are driving substantial earnings power.

"While the notebook segment remains cloudy, we do believe SYNA has won the touch controller for Samsung's Galaxy S4," analyst Rajvindra S. Gill said. "In our view, the initial design was won by ATML, but SYNA ultimately won out due to its Hover technology. An initial teardown (i.e., China handset) has verified that SYNA is supplying the touch controller while ATML is providing the sensor hub. Based on our estimation of the Galaxy S3 sell-through in 2012 - around 80MM units and our forecast of 100-120MM in 2013, we believe this sizable program could add an incremental $100MM-$120MM of revenues and $0.50-$1.00 of Non-GAAP EPS. Moreover, our detailed analysis reveals SYNA has gained significant share at most of the leading smartphone platforms – NOK, BBRY, HTC, LG and SYE – and maintained its dominant position at Huawei and ZTE."

The Samsung Galaxy S4 win could add $0.50-$1.00 of incremental EPS in CY13, the analyst notes.

In addition to the upgrade, the firm raised FY13 EPS from $2.05 to $2.30 and FY14 EPS from $2.40 to $3.45.

For an analyst ratings summary and ratings history on Synaptics click here. For more ratings news on Synaptics click here.

Shares of Synaptics closed at $38.01 yesterday.

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