Synaptics Buy Thesis Unchanged At Mizuho, Despite Bloomberg Report Of Rejected Bid

• Synaptics, Incorporated SYNA shares have risen 24.3 percent over the past five trading days, reaching a high of $82.46 on September 30.
• Mizuho’s Vijay Rakesh has maintained a Buy rating and price target of $105 on the company.
• Despite reports of Synaptics having rejected a $110 bid from a Chinese state-owned investment group, Rakesh believes that the company’s leadership position in the display market make it an attractive target.

Analyst Vijay Rakesh reported that an article in Bloomberg mentioned that Synaptics had rejected a bid that represented a 70 percent premium to the stock’s closing price on September 30 from a government owned investment group in China.

While this report is still unconfirmed, Rakesh believes that “taking a fractional ownership stake has potentially less challenges and could improve Synaptics' position in China, where it has been lagging,” although the deal would need the approval of the Committee on Foreign Investment in the US.

Rakesh also mentioned that China was among the new emerging markets for Synaptics’ Force Touch, TDDI and touch offerings, while expressing optimism regarding Renesas.

In addition, “TDDI is planned to be a big ramp in 2016 as it aims to drive units, 2x ASP, and significant multi-year driver-IC share gains,” the Mizuho report said, while adding that Force Touch was expected to be “a margin and ASP tailwind for SYNA in 2016.”