On Friday, KeyBanc adjusted its financial outlook for Synaptics (NASDAQ:SYNA), reducing the price target to $100 from the previous $115, while sustaining an Overweight rating on the stock. This shift comes after Synaptics reported its fiscal fourth quarter results for June, which surpassed expectations, but provided guidance for the first quarter of September that was somewhat mixed. Revenue and gross margin forecasts were below projections, though earnings per share were above.
Synaptics' performance in the fourth quarter was bolstered by its Enterprise segment, with quarter-over-quarter growth in PC operations, and improvements in its video interface offerings through DisplayLink. The company also observed that inventories in the Enterprise and Automotive sectors have largely returned to normal levels, although the demand in these markets remains subdued.
The Internet of Things (IoT) segment is showing signs of a robust recovery, with expectations for double-digit year-over-year growth to continue. KeyBanc expressed optimism about the Enterprise segment reaching a low point and beginning to recover.
In light of these developments, KeyBanc has revised its estimates for Synaptics and lowered the price target. However, the firm believes that Synaptics is still favorably positioned to experience a strong cyclical recovery and to capitalize on long-term growth driven by the IoT sector.
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