Schwab Upgrades Synaptics to Outperform

Analyst Michelle Lin Gutierrez says the company should benefit from strong notebook demand in the back-to-school season

Schwab Soundview upgraded Synaptics (SYNA ), a maker of interfaces for notebook computers, to outperform from neutral.

Analyst Michelle Lin Gutierrez says Synaptics is poised to benefit from better-than-expected back-to-school demand for notebooks and an improved supply of iPod mini drive. She says checks indicate that worrisome notebook component inventories at original design manufacturers have normalized. She says the refreshed iPod is doing well at new price points. Her checks show that the iPod mini launch was successful in Europe.

Gutierrez notes while notebook and iPod products tend to have lower average selling prices, the company is finding ways to reduce the cost of goods sold. She raised the 56 cents fiscal 2005 (June) earnings per share estimate to 60 cents, and upped the 64 cents fiscal 2006 estimate to 70 cents. She raised her $20 target to $22.

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