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On Friday, Needham analysts adjusted their outlook on Synaptics (NASDAQ:SYNA), increasing the price target from $90.00 to $100.00 while maintaining a Buy rating on the stock. Currently trading at $74.82, Synaptics appears undervalued according to InvestingPro analysis. The revision follows Synaptics’ financial performance, which exceeded expectations for the first quarter of fiscal year 2025, with second-quarter guidance also surpassing forecasts, supported by three analysts recently revising their earnings estimates upward.
The company’s management has reported improved visibility into future performance, with a strengthening backlog and booking trends. Synaptics is experiencing positive demand trends in its end markets, with inventory levels now mostly at or below pre-pandemic levels. The company’s strong financial position, evidenced by a healthy current ratio of 4.49 and moderate debt levels, positions it well for future growth. This situation is expected to contribute to the company’s growth.
Needham analysts project that Synaptics will see sequential growth of approximately $10 million starting in the June quarter, which they anticipate will continue throughout the calendar year 2025. This growth trajectory is attributed to new product launches across Synaptics’ portfolio.
The analysts also suggest that there is potential for further growth if the economic environment improves more than currently expected or if there is a new PC refresh cycle. Moreover, they noted that the recent Broadcom (NASDAQ:AVGO) transaction should facilitate Synaptics’ penetration into new Android accounts, potentially expanding the company’s market reach.
In other recent news, Synaptics Incorporated has seen significant changes in its executive leadership and financial outlook. The company’s President and CEO, Michael Hurlston, has resigned to take on the CEO position at Lumentum Holdings Inc (NASDAQ:LITE)., with CFO and SVP Ken Rizvi taking over as interim CEO. Analysts at Needham have maintained a "Buy" rating for Synaptics, emphasizing the strategic initiatives and partnerships established during Hurlston’s tenure. Meanwhile, KeyBanc analysts have reiterated a Sector Weight rating on Synaptics stock.
In financial updates, Synaptics expects second-quarter revenue to reach $267 million, slightly exceeding its previous forecast of $265 million. Earnings per share (EPS) are also projected to surpass the midpoint of their guidance of $0.85. In other financial developments, Synaptics has secured additional funding through the acquisition of an additional $50 million in aggregate principal amount of 0.75% Convertible Senior Notes due 2031.
These recent developments reflect the company’s focus on maintaining strategic direction and continued success, despite leadership changes. As Synaptics embarks on its search for a new CEO, the strong foundation laid by Hurlston and the current strategic direction are expected to remain intact, providing continuity and stability for Synaptics and its stakeholders.
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