Analyst Note| Abhinav Davuluri, CFA |
No-moat Synaptics finished the third quarter with both the top- and bottom-line falling in line with management's prior guidance. The firm's overall profitability continued to improve as the business's product mix skews more toward higher-margin products. This strategic shift toward higher-margin products has been successful, with the third quarter clocking in the highest adjusted gross margins in the company's history. We expect this shift to continue to bear fruit. As a result, we are raising our fair value estimate to $120 per share from $91. With shares trading near $137 after hours, we recommend investors wait for a pullback before committing capital to the name.