Synaptics Margins And Fingerprint Sensor Traction Are Key Risks: Oppenheimer

Oppenheimer’s Andrew Uerkwitz expressed concern regarding the risks faced by Synaptics, Incorporated SYNA with regarding to the lack of track for its fingerprint sensor and the continuing margin headwind due to TDDI.

Uerkwitz downgraded the rating on the company from Perform to Underperform, with a price target of $45.

2 Concerns

“In both cases, market and customer demands are not in favor of SYNA,” the analyst mentioned, explaining that there has been an increase in the number of competitors for the fingerprint sensor and shifting customer preference has led to Synaptics losing market share.

“In display, we believe TDDI’s ramp will continue to hurt margins, while growing penetration of OLED display will quicken SYNA’s DDIC decline before its own OLED DDIC becomes available,” Uerkwitz stated.

Under-Prepared

The analyst believes Synaptics is under-prepared for the recent shift of OEMs to front fingerprint sensor, and expressed concern regarding the well-publicized Samsung-Precise Biometric licensing deal, which could lead to accelerated share loss at Samsung.

“For touch/display, we believe SYNA’s OLED DDIC won’t contribute meaningfully until 2018 and TDDI ramp will keep pressuring gross margin,” Uerkwitz went on to say.

Looking forward to the company’s analyst day, Uerkwitz pointed out that management was likely to comment on the competition and margin concerns for TDDI, as well as Synaptics’ strategy to win fingerprint deals at multiple tier-1 OEMs in China.

At last check, shares of Synaptics were down 2.38 percent at $55.04.