What happened

Shares of Synaptics (NASDAQ:SYNA), 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.

A rising stock chart.

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.

Timothy Green has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.