Yahoo Finance Results: Synaptics Incorporated Exceeded Expectations And The Consensus Has Updated Its Estimates
Synaptics Incorporated (NASDAQ:SYNA) defied analyst predictions to release its quarterly results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 9.4% to hit US$388m. Synaptics also reported a statutory profit of US$0.58, which was an impressive 63% above what analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on Synaptics after the latest results.
View our latest analysis for Synaptics
Taking into account the latest results, Synaptics's eleven analysts currently expect revenues in 2020 to be US$1.37b, approximately in line with the last 12 months. Synaptics is also expected to turn profitable, with statutory earnings of US$1.09 per share. Before this latest report, the consensus had been expecting revenues of US$1.28b and US$0.27 per share in losses. So we can see there's been a pretty clear upgrade to expectations following the latest results, with a slight bump in revenues expected to lead to profitability earlier than previously forecast.
It will come as no surprise to learn that analysts have increased their price target for Synaptics 28% to US$79.50 on the back of these upgrades. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Synaptics at US$100.00 per share, while the most bearish prices it at US$55.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. From these estimates it looks as though analysts expect the years of declining sales to come to an end, given the flat revenue forecast for next year. That would be a definite improvement, given that the past five years have seen sales shrink five years annually. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 8.8% per year. Although Synaptics's revenues are expected to improve, it seems that analysts are still expecting it to grow slower than the wider market.
The Bottom Line
The most important thing to take away from these updates is that there's been a clear step-change in belief around the business' prospects, with analysts now expecting Synaptics to become profitable next year. Fortunately, analysts also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Synaptics going out to 2022, and you can see them free on our platform here..
You can also see whether Synaptics is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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