Investors wanting to add fast-growing firms to their portfolios at favourable prices will benefit from the current sell-off in tech stocks. Several high-profile tech firms are currently on sale, including one that could lead you in capitalizing on the hot 5G trend.
Synaptics (NASDAQ: SYNA), arguably one of the best 5G stocks, is well-positioned to benefit from the spread of 5G networks and devices, as well as a number of additional growth opportunities. Furthermore, after a pullback at the end of April, the stock is currently trading at lower multiples.
Let’s take a look at why you should purchase this 5G stock right now.
Synaptics’ mobile business can rev up its engines once again
Despite market instability, Synaptics stock has been flying high in 2021, owing to the phenomenal development of its Internet of Things (IoT) division, which has kicked on the throttle in recent quarters. The mobile business’ contribution to Synaptics’ top line has dwindled in recent years, falling to only 25% of overall sales in fiscal Q3 from 54% the year before.
Synaptics’ mobile revenue fell to $81 million last quarter, down from $177 million the year before, a 54 percent drop. However, investors should keep in mind that the segment’s revenue was damaged by the sale of the mobile LCD (liquid-crystal display) TDDI (touch/display integration) business, which was finalized in April of last year. Synaptics’ quarterly revenue from that business was roughly $65 million.
Synaptics’ mobile business is poised for long-term development, therefore investors should be optimistic. Several smartphone OEMs (original equipment manufacturers) have awarded the business design victories for its OLED (organic light-emitting diode) touch controllers, including Apple for the iPhone 12.
Apple is one of Synaptics’ most important mobile clients, which is fortunate because the iPhone manufacturer is dominating the 5G smartphone industry. In the first quarter of 2021, Apple sold 40.4 million units of the all-OLED, 5G-enabled iPhone 12 range, accounting for 30% of total shipments. Apple’s excellent sales momentum can be maintained since millions of consumers are apparently waiting to upgrade to its upcoming 5G phones, sparking a multiyear upgrade cycle that would be beneficial to Synaptics.
Apple, on the other hand, is just one of several drivers for Synaptics’ mobile business. Synaptics recently announced that its second-generation OLED touch controllers are now in serial production, increasing the company’s technological edge over competitors. As a consequence, as CEO Michael Hurlston said on the company’s most recent earnings conference, they’re gaining momentum with prominent smartphone OEMs.
Things are going to get a whole lot better
Going by the midpoint of Synaptics’ forecast range, the company’s mobile business would produce $78 million in revenue this quarter, down about 35% from the previous quarter. As a result, this quarter’s year-over-year reduction in mobile revenue is likely to decelerate significantly. Once the new smartphone design wins go into production, and the impact of the now-divided LCD business fades away after this quarter, the firm should start putting on the pedal.
In a recent conference call with investors, CEO Michael Hurlston observed, “We’re sort of now at the bottom of our mobile revenue curve…from here, we will build.”
Jason is the Marketing Manager at a local advertising company in Australia. He moved to Australia 10 years back for his passion for advertising. Jason recently joined BFA as a volunteer writer and contributes by sharing his valuable experience and knowledge.