Synaptics: Why To Buy This 'Leader, Touch-Me-Not, Under the Radar Consolidator'

Shares of Synaptics, Incorporated SYNA are up almost 3 percent on Friday, after the company beat earnings and revenue estimates on Thursday afternoon. Also on Thursday, analysts at Mizuho Securities initiated coverage on the stock with a Buy rating and a $115 price target.

The report highlights five key points to keep in mind regarding this computer hardware developer.

1) The firm believes Synaptics is a leader in the global PC touch market, with roughly 65 percent of the market share. Its traditional competitors in PCs, like Alps, have not been able to keep up, while, in the smartphone market, the company had the largest portion of the market -- approximately 35 percent.

Related Link: BlackBerry Stock Jumps Amid Share Repurchase Plan

2) The company has noted its market share gains with The Touch Display Driver Integration (TDDI) “could drive revenues from zero now to $500M by 2018. TDDI enables 50-70% cheaper touch solutions versus conventional discrete solutions, as the sensor and flex are eliminated from the bill of materials,” the note explains.

3) Synaptics is expanding in China, the Mobile Payments space and Touch technologies. Mizuho analysts see an opportunity in the growing 4G and smartphone handset market in China “with new mobile payments networks from Alipay (Alibaba’s payment network) to Tencent.”

Related Link: 2 Tech Micro-Caps This Expert Is Watching

Exiting 2014, Synaptics more than doubled its distributors and partners in China – in relation to 2013. The company has seen a 40 percent CAGR, “with FP sensors, especially with China and now ramping on the Galaxy S6 with its new area sensors. The FP area sensors are significantly higher ASP (1.5-2x) and better margins than the older swipe sensors,” the analysts explicate.

4) The automotive segment represents a long-term opportunity. The company is “just starting to 'sample' into automotive markets. With Automotive likely to be a 100M unit market by 2018, SYNA expects to start seeing revenues in the segment by late 2016-17 from infotainment center console, heads-up display (HUD) and doors-windows capacitive touch button applications.”

5) “Valuation: Growth at a Value Price, Less Risk with New CFO in Place”