Why Synaptics (SYNA) Was Downgraded

NEW YORK (TheStreet) -- Oppenheimer downgraded Synaptics (SYNA) to "perform" from "outperform."

Synaptics fell 1.8% to $59.13 Tuesday.

The firm said the change is a valuation call as stock of the touchscreen maker is up 43% since September. Oppenheimer also removed its price target for Synaptics, which was previously set at $55.

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Separately, TheStreet Ratings team rates SYNAPTICS INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate SYNAPTICS INC (SYNA) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels and solid stock price performance. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 5.0%. Since the same quarter one year prior, revenues rose by 43.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SYNA's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.34, which clearly demonstrates the ability to cover short-term cash needs.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, SYNAPTICS INC's return on equity exceeds that of both the industry average and the S&P 500.
  • Powered by its strong earnings growth of 45.45% and other important driving factors, this stock has surged by 74.26% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.

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