Synaptics' (SYNA -1.23%) stock went on a wild ride after it reported earnings last week. After a top-line beat and a bottom-line miss, the share price started moving upward. The company's third-quarter earnings outlook sent the price back down, however, as Synaptics gave guidance of $0.44-$0.64 per share, while the Street was expecting $0.64.

At least one analyst sees something good in Synaptics, though, as Feltl upgraded the stock from a hold to a buy, with a price target of $68. The upgrade sent the stock price back up another 12% before it settled back down.

With strong revenue guidance for next quarter, likely in conjunction with an upcoming flagship phone release from Samsung (NASDAQOTH: SSNLF), and the growing popularity of fingerprint scanners thanks to Apple (AAPL -1.92%), it's easy to get excited about the potential for Synaptics in calendar 2014 despite the pressure it faces on margins.

Stopping the bleeding
A key takeaway from Synaptics' second-quarter earnings report is the company's year-over-year revenue improvement in its PC division. The segment, which had seen declining revenue in conjunction with the secular shift away from PCs, saw 5% sequential growth in the first quarter, but was still down 4%, year over year.

Last quarter, the company reported 20% sequential growth and 17% year-over-year improvement in its PC segment revenue. A large part of that growth -- about $4 million -- came from its latest acquisition in Validity Sensors, which makes fingerprint scanners for PCs. Still, another $6 million-plus came from the company's organic growth.

The company has made strides to innovate and acquire key technology that gives it a large presence in PCs, particularly laptops. Its new ForcePad trackpad allows for thinner and lighter laptops and is featured in HP's new Elite Folio 1040. The company is also developing ThinTouch, which allows for super-thin keyboards, like what's in Microsoft's Surface.

The company is also capitalizing on the growth of touchscreen PCs brought about by Windows 8, but accounts for those touchscreens in its mobile segments. Additionally, with the acquisition of Validity Sensors, the company has a foothold on fingerprint scanning. It may integrate the technology into its TouchPad line, and it plans to expand the technology to mobile devices.

Strength in mobile
Samsung, one of Synaptics' biggest customers, posted its first profit decline in two years last quarter. The culprit was lower-than-expected mobile device sales. The company expects a further quarter-over-quarter decline this quarter, but will likely release the Galaxy S5 in March.

It's rumored that Samsung will include a fingerprint scanner in the device in order to keep up with Apple's iPhone 5s. Apple's innovative new phone is said to be a main reason why Samsung missed its previous outlook for smartphone sales. It's also the beginning of a trend that Synaptics is well-positioned to take advantage of with its Validity purchase. Some predictions are that fingerprint scanners could find their way into as many as 1 billion devices next year.

Apple is likely not in the market to shop its Touch ID technology, especially not to a competitor like Samsung. Part of the reason for the Feltl upgrade was the analyst's belief that Synaptics won the design for a fingerprint scanner in the upcoming S5 based on the company's belief that the Validity acquisition will become accretive sooner than expected.

Aside from fingerprint technology, Synaptics has strong relationships with smartphone OEMs on both the high end and in the middle. Samsung competes in every market, but Synaptics' Chinese customers like Lenovo, Huawei, ZTE, and Coolpad are capturing a large share of the growing low end and mid-range of the market, which will further drive Synaptics' mobile segment revenue. The company has work to do in getting its costs down to compete in the low end, but it expects to see results as soon as the end of fiscal 2014.

Put a finger on it
Synaptics reported a mixed quarter, and its earnings outlook wasn't great on a GAAP basis, but there's plenty of reasons to believe it will see further revenue growth in 2014. After a couple years of secular pressure in the PC market, Synaptics looks poised to once again grow revenue in both its PC and mobile divisions.