Synaptics (SYNA) Highlighted as Top Semi Pick, Needham Sees 50%+ Upside

Needham & Company analyst Rajvindra Gill reiterated a Buy rating and $130.00 price target on Synaptics (NASDAQ: SYNA) highlighting the company as his top pick for 2021 with over 50%+ upside. The delta is based on relative valuation as M&A is in the process of transforming the business and not fully understood by investors at this early date.

The analyst stated "Synaptics' gross margin is projected to exceed 50% next quarter, but its shares are valued at just over 10x our FY22 Non-GAAP EPS estimate, a 60% discount to other chip companies with 50% GMs ( P/E 16x). We believe that recent M&A deals (acquisitions of Broadcom's wireless IoT business and DisplayLink) have transformed the business and will increase higher margin revenues while simultaneously opening new markets and creating opportunities for cost synergies. We look for the IoT business to have opportunities in the Edge computing, wireless connectivity and USB-C categories. In the remaining mobile business, SYNA is dominating the high-margin OLED touch controller market, winning virtually every new design by major handset OEMs".

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 $82.53 yesterday.

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