What happened
Shares of Synaptics (SYNA -1.53%), a provider of fingerprint sensors and other human interface products, jumped on Friday after the company received an analyst upgrade. This comes a few days after a smartphone manufacturer unveiled the first phone with an in-display fingerprint sensor, which uses Synaptics' technology. Synaptics stock was up about 13.5% at 11:55 a.m. EST.
So what
Keybanc analyst John Vinh upgraded Synaptics on Wednesday to overweight, the equivalent of a buy rating, and slapped a $60 price target on the stock. Vinh believes that Synaptics is more diversified than it's ever been, paving the way for growth over the next few years.
Image source: Getty Images.
Vinh also pointed to Synaptics' in-display fingerprint sensor as a growth driver. The sensor was featured in a smartphone unveiled by Vivo at CES. The tech only works with OLED displays, so the sensors will likely be limited to high-end phones for the time being. But OLED displays should become more common over the next few years.
Even after Friday's surge, shares of Synaptics are still a full $10 below Vinh's new price target.
Now what
One risk for Synaptics is that smartphone manufacturers will bypass fingerprint sensors altogether and opt for facial recognition instead. Apple's iPhone X does exactly that, making it the first iPhone in years to not feature a fingerprint sensor.
Synaptics began mass producing its in-display sensors in December, promising that they'll be twice as fast as 3D facial recognition. If that claim holds up, this could become a standard feature in flagship phones beginning this year.
