Synaptics Set to Benefit From Increasing Touchscreen Technology Demand

Synaptics (SYNA) is due to report the week of April 19th and I am very bullish on their current and future quarter.

Should things go as I expect, I see SYNA moving to at least $30 at earnings.

As you can see from the below chart, SYNA has taken quite a dip from the 52-week high at $32.09, mainly due to worry of falling margins.

However, after a more than 22% fall in share price since then, this seems to be more than priced in, and strong business could show very nice upside in share price.

SYNA guided to $58-61M for the current quarter, representing a 44-55% increase yoy. Due to growing demand of 'touchscreen' technology, their guidance looks conservative and may report at the higher end of expectations at $61M. Apple's (AAPL) iPhone is the primary catalyst for boosting interest in touchscreen-only phones, which Strategy Analytics believes will initiate 115 million touchscreen mobile units within two years. Many expect the iPhone to be selling in the millions as soon as it hits stores in June of 2007, and if this is the case we can be sure that competing manufacturers and vendors will want a piece of this craze.

Stuart Robinson, Director of the Handset Component Technologies service at Strategy Analytics said:

The introduction of the iPhone leads us to strengthen our existing view that the market for touchscreen phones is set to take off very soon...Many companies including Synaptics, ALPS, Cypress, Quantum Research and Immersion can expect to receive far more interest in their touchscreen technologies in coming months.

Disclosure: Author has a long position in SYNA