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Synaptics Inc SYNA

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Synaptics Expands Margins as Internet of Things Shines Again; Raising FVE to $120; Shares Overvalued

Abhinav Davuluri, CFA Sector Strategist

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.

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Company Profile

Business Description

Synaptics develops human interface solutions that allow touch, display, fingerprint, video, audio, and voice functions for smartphones, PCs, automotive vehicles, consumer Internet of Things products, as well as other electronic devices.

1251 McKay Drive
San Jose, CA, 95131
T +1 408 904-1100
Sector Technology
Industry Semiconductors
Most Recent Earnings Dec 31, 2020
Fiscal Year End Jun 30, 2021
Stock Type Cyclical
Employees 1,387