Synaptics stays green following bullish Northland launch

• Though the Nasdaq is down 1.3% and the Philadelphia Semi Index 1.5%, Synaptics (NASDAQ:SYNA +0.4%) remains above water after Northland Securities' Tom Sepenzis launched coverage with an Outperform rating and $110 target.
• Sepenzis argues Synaptics' efforts to create integrated touch controller/display driver (TDDI) chips will put it "beyond the reach of many of its competitors." He also sees the Apple Pay launch boosting Synaptics' fingerprint sensor sales, as Android and Windows OEMs look to keep pace.
• Regarding Qualcomm's fingerprint sensor, the unveiling of which led Synaptics to sell off last week, Sepenzis insists Synaptics "has a significant lead in terms of product availability and technology development," and expects it to maintain a large biometrics share. Qualcomm has argued its reliance on ultrasonic fingerprint recognition will enable a superior solution, one that can scan through smartphone cover materials and "contaminants" such as sweat and condensation.
• His target is equal to 16x an FY16 (ends June '16) EPS estimate of $6.85.

Comments

[Philip Marlowe]

The selloff from the Qualcomm news was typical uninformed headline following. I would at wait at least a year to see what is the actual client uptake from the Qualcomm ultrasound sensor before making any investment decisions based on it.

Big semiconductor companeis try to enter new businesses all the time but they are not always successful. If that was the case Skyworks would now be bankrupt because Qualcomm entered their field a couple of years ago. But they are far from bankrupt. Or even Qualcomm would be bankrupt because Intel entered their main line. But that is far from happening too.

[Russell Naisbitt]

Phillip,

I just posted an article to correct some errors in the analysis of the QCOM Sense impact on SYNA that was published by one of our SA colleagues. Link here: http://seekingalpha.co...

[Eric Jhonsa]

Time will tell how well Qualcomm's solution fares. But it does seem to be more than a me-too solution. I think concerns that ultrasonic recognition could give Qualcomm a competitive edge are the reason Synaptics sold off, rather than just headlines about a major chipmaker entering the market.

[Russell Naisbitt]

Eric,

Sense is definitely a new competitive threat and you are right that that time will tell in terms of its impact. Price is a "known unknown" at this point. At the end of the day it will likely come down to cost vs benefits.

I would like to here how SYNA's management perceive the threat and I will be expecting analysts to be on this like gravy on a biscuit at the next conference call or investor presentation. My calls to their IR lady were not returned.