NEW YORK (TheStreet) -- Synaptics (SYNA - Get Report) was downgraded to "sector perform" from "outperform" by Pacific Crest on Friday.

Pacific Crest analysts John Vinh and Kevin Chan see "limited catalysts" for the computer touchpad and touchscreen maker "given share loss and execution risks on fingerprint sensing." The analysts said the company faces increased competition.

"Based on supply chain conversations, we believe SYNA has likely lost the touch controller socket on the upcoming Galaxy S6 (GS6) to STM," the analysts wrote. "We believe SYNA's latest-generation touch controller was highly competitive, but that STM was "good enough" and was able to win on pricing with ASPs of $1+."

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TheStreet Ratings team rates SYNAPTICS INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate SYNAPTICS INC (SYNA) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. 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 and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share."

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

  • SYNA's revenue growth has slightly outpaced the industry average of 18.7%. Since the same quarter one year prior, revenues rose by 27.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • SYNA has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.53, which clearly demonstrates the ability to cover short-term cash needs.
  • 45.43% is the gross profit margin for SYNAPTICS INC which we consider to be strong. Regardless of SYNA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SYNA's net profit margin of 9.40% is significantly lower than the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has decreased by 23.9% when compared to the same quarter one year ago, dropping from $34.94 million to $26.59 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. In comparison to the other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, SYNAPTICS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • You can view the full analysis from the report here: SYNA Ratings Report

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