Synaptics Shares Have Snapped Back In Anticipation That The Worst Is In Sight

Summary

• Synaptics missed December quarter expectations, with a sharp sequential decline in the IoT business and sequential growth in Mobile that isn't sustainable.
• Inventories remain too high among PC, smart home, and other consumer product customers, driving weaker guidance and an expected 8% revenue decline in March.
• The Street may be too confident that Synaptics won't see another weak guide for June, as inventories still look high relative to demand, but management is handling this downturn well.
• I have broader concerns that the semiconductor rally has come too far too fast, but Synaptics still offers relative value and attractive long-term drivers.

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I liked Synaptics (NASDAQ:SYNA) for its turnaround potential when I wrote about the shares in November, but I underestimated just how quickly the market was going to shift to looking past this correction phase of the cycle. Although chip stock

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.