Why Synaptics Shares Sizzled

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Synaptics (Nasdaq: SYNA  ) gained as much as 14% in early trading today, after beating top- and bottom-line estimates for its fiscal first quarter. Shares have since dropped through the day, but retain an 8% gain as of this writing.

So what: Analysts had expected $124 million in revenue, and adjusted earnings of $0.34 per share. Investors were rewarded with top-line results of $127 million, and adjusted EPS of $0.37. Management also guided current-quarter revenue to the $134 million to $142 million range, which is a rather broad range that neatly encloses consensus expectations of $136.5 million, but offers some nice upside.

Now what: Despite the double beats, Synaptics' revenue and net income both came in well below the year-ago quarter's results. Analysts at Feltl weren't impressed, and downgraded the post-pop stock to a sell. This gain doesn't come close to erasing the stock's 26% drop over the past year, and with all of Synaptics' key financial metrics showing gradual declines over the past year or so, I'd stay on the sidelines until positive momentum is more than just a prediction for the future.

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