On Friday, Wells Fargo adjusted its financial outlook for Synaptics (NASDAQ:SYNA) Incorporated, a leading developer of human interface solutions. The firm reduced the price target on Synaptics (NASDAQ: SYNA) shares to $95.00 from the previous $115.00, while maintaining an Equal Weight rating.
Synaptics' recent financial disclosures revealed quarterly results and forecasts that aligned closely with expectations, indicating low single-digit percentage sequential revenue growth. The revised price target from Wells Fargo is based on a reduced estimate, applying a 31 times next twelve months (NTM) earnings per share (EPS) multiple.
Notably, Synaptics' wireless Internet of Things (IoT) sales are showing signs of improvement following a period of inventory adjustments by customers. Additionally, the company is successfully reducing its distribution and internal inventory levels.
Despite these positive developments, challenges remain. Synaptics is still experiencing sluggishness in certain areas, particularly within the Enterprise segment. Moreover, a broader weakness in IT spending is impacting the pace of the company's sales recovery and affecting its gross margin.
InvestingPro Insights
In light of Wells Fargo's updated financial outlook for Synaptics Incorporated, the real-time data and InvestingPro Tips provide a deeper understanding of the company's current position. Synaptics (NASDAQ: SYNA) is trading at a high EBITDA valuation multiple, with a Price/Earnings (P/E) ratio of -46.18, which further adjusted to -50.74 over the last twelve months as of Q2 2024. This negative P/E ratio reflects the company's lack of profitability over the past year. However, analysts predict that Synaptics will return to profitability this year.
InvestingPro data indicates a significant revenue decline of 41.15% over the last twelve months as of Q2 2024, with a quarterly decline of 32.88% in Q2 2024. This aligns with the analysts' anticipation of a sales decline in the current year. Despite these challenges, Synaptics has a robust Gross Profit Margin of 47.6%, showcasing the company's ability to retain earnings after the cost of goods sold.
An InvestingPro Tip highlights that Synaptics' management has been actively buying back shares, a move that often signals confidence in the company's future prospects. Additionally, despite not paying dividends, Synaptics has seen a strong return over the last five years, with a 19.71% 1-year price total return as of the latest data.
Investors interested in a comprehensive analysis of Synaptics can explore further on https://www.investing.com/pro/SYNA, where there are 11 additional InvestingPro Tips available. For those looking to delve deeper into the financial metrics and strategic insights, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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