This tech stock is a solid bet for this earnings season
Synaptics (((NASDAQ: SYNA). Equities crushed a wide range of markets in 2021 and have increased by more than 50% year-to-date due to their remarkable growth. Internet of things (IoT) Business. It is worth noting that stock prices are doing so well despite experiencing volatility.
As the graph below shows, Synaptics shot his arm well in early May.The company’s performance Accounting third quarter Reported (ending on March 27), they stopped the stock price from falling and helped start a rally that has sent the stock higher since then. A similar story could unfold when Synaptics announces its fourth-quarter earnings on August 5.
Synaptics applied a purple patch
Synaptics predicts fourth-quarter revenue of $ 325 million at the midpoint of its guidance range. That’s a 17% increase from $ 277.6 million in revenue in the year-ago quarter.NonGAAP Gross profit margin is expected to jump from 46.9% last year to 56.5% in the fourth quarter. Thanks to topline improvements and a stronger margin profile, the company expects adjusted earnings of $ 2.00 per share at the midpoint of guidance, a significant increase from $ 1.24 in the year-ago quarter.
However, it’s not surprising that Synaptics is better than expected, as the IoT business, which is expected to generate 49% of fourth-quarter revenue, is so strong.In that May Revenue conference call, CEO Michael Hurlston pointed out that the company is facing “a strong backlog of new design wins in all product areas.” Coming to the IoT business, Synaptics continues to “proactively expand and diversify its customer base and end markets across all product lines,” he added.
As a result of the design’s winning momentum and backlog, management believes that the company’s IoT segment could grow at a faster pace than the industry average of 10% to 15%. This is not surprising as Synaptics is entering a fast-growing IoT niche such as home automation, smartwatches, streaming devices, video interface products and automobiles.
Synaptics has witnessed tremendous traction in some of these areas. For example, the new design wins that chip makers have won in the last nine months in home automation, streaming devices and smartwatches have moved into production. As a result, Synaptics predicts that the quarterly revenue execution rate for these products will double compared to July 2020. Meanwhile, the touch and display driver integrated solution, which has been sold to players in various automotive industries, will be launched by US automakers in China and Europe in the fall of the new 2022 model.
Mobile and PC business is growing
Not only does Synaptics’ IoT business look solid, but the same is true for the PC and mobile businesses.
The PC segment is expected to account for 27% of the company’s top line in the fourth quarter and is on the rise due to rising demand for notebooks. Synaptics’ PC business is better than expected due to the broad strengths of the PC market and the design wins it has won on Chromebooks.
Fingerprints and touchpad chips will be available to the first Chromebook manufacturers earlier this year, with two more scheduled to go into production in late 2021. The good news for Synaptics is that the Chromebook market is expected to grow by 33.5%. In 2021, the company is in a position to enter a profitable market. More importantly, the pandemic has long-term boosted the PC market. Shipments are expected to increase by 2025, according to IDC estimates.
As a result, Synaptics’ PC business can continue to improve. On the other hand, the mobile business seems to be all on track thanks to the growing adoption of OLED (organic light emitting diode) screens. Synaptics has begun expanding production of a new generation of OLED touchscreen controllers that have the potential to drive meaningful growth in the mobile business. We will start shipping two new handset model products from Korean OEM (Original Equipment Manufacturer), and will acquire two more designs by Chinese OEM and start production later this year.
Finally, this year’s iPhone model production lamps will bring another tailwind to Synaptics after the second half of this year.Synaptics management will be at the end of 2020 Supply of touch screen controller For iPhone 12, I don’t give it an explicit name, Apple (((NASDAQ: AAPL)... Sharp was one of Synaptics’ notable customers in 2020, accounting for 12% of total revenue.Sharp-with LG Samsung –Provide iPhone screen to Apple. They are all Synaptics customers.
Apple is expected to increase production of iPhone models by 20% to 90 million units this year, which should bring about a rise corresponding to Synaptics’ mobile business.And given the fact that you can see the sale of the iPhone Set for multi-year growth, Synaptics’ mobile business seems to be doing well.
All of this shows that Synaptics’ impressive stock market recovery is likely to continue.Therefore, investors Tech stocks You need to take a closer look at it in their portfolio, especially given that it is trading with only 16 times higher futures earnings compared to S & P 500The average return on is a multiple of 36.
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