While Foolish investors may look at Wall Street opinions with a bit of skepticism, in the aggregate, those analysts are generally pretty smart. So when a stock is trading 40% below the consensus one-year target, it's worth noting.

Such is the case with Synaptics (NASDAQ:SYNA). Shares are currently trading around 20% off the 52-week high they reached after the company's third quarter earnings. Despite beating estimates on both the top and bottom lines, shares closed out the next day slightly lower than before the earnings release.

Nonetheless, analysts see a lot of upside in the touchscreen maker as it takes on Cypress Semiconductor (NASDAQ:CY) and wins share in Samsung (NASDAQOTH:SSNLF) devices with the addition of its fingerprint sensors.

Is Synaptics undervalued?
Analysts certainly think so.

For the current fiscal year, ending at the end of this quarter, analysts expect Synaptics to grow earnings about 30%. Next year, they see another 14% in earnings growth. As a result, Synaptics forward P/E is just 12.5, while it's expected to grow over 20% per year for the next five years. That puts Synaptics' PEG ratio at just 0.61.

Comparatively, Cypress trades for 14 times analysts fiscal 2015 (ends December) earnings estimates. At the same time, analysts forecast earnings growth at 10% annually over the next five years. The result is a less appealing PEG ratio of 1.4 despite similar P/E ratios.

Indeed, Synaptics looks like it will continue to grow more than Cypress.

Competing with Cypress for market share
Synaptics has grown revenue extremely well over the last 12 months. Revenue is up 30% compared to Cypress's 4% decline in revenue during the same period.

Synaptics has taken the approach of attacking the high-end market for its touchscreen controllers. Meanwhile, Cypress has been relegated to the low-end market, which has been unable to offset the declines in its PC-based segments.

The future looks good for Cypress, however, considering the high-end of the smartphone market is nearing saturation. With key design wins with ZTE and Coolpad, the company is poised to do well in China.

Synaptics looks better, though. The company won the touchscreen controller design for the Samsung Galaxy S5 and added fingerprint sensor technology through the acquisition of Validity Sensors last year.

Fingerprint sensors could be the next must-have feature in smartphones after Samsung and Apple incorporated them into their designs. This would add significant incremental revenue if Synaptics gets its sensors into a large portion of the mid-to-high-end market.

Samsung may be the most important smartphone manufacturer for any smartphone component supplier, and Synaptics appears to be winning more designs at the Korean electronics maker. As Samsung expands its "hover" functionality to the mid-tier, Synaptics is the likeliest beneficiary, according to Rajvindra Gill at Needham & Co.

Synaptics is also very competitive in China, where it has design wins at Lenovo, Coolpad, Huawei, and ZTE. Synaptics is attacking the mid-to-low end of the market with display integrations. Several low-end designs positively affected last quarter's earnings results, according to CEO Richard Bergman. The company is sacrificing selling price for volume, however, resulting in a decrease in gross margin.

Still, the progress is a good indicator that Synaptics is successfully taking on Cypress in the lower-end of the market.

It certainly looks undervalued
It's hard to put an exact target on Synaptics price one year from now, but almost every analyst expects shares to climb significantly higher from its current price. With a strong position in the touchscreen market (compared to Cypress) and the potential of its fingerprint sensor business to grow significantly over the next few years, I'm inclined to agree. At the very least, it shouldn't be trading at a similar valuation to Cypress Semiconductors, which is more of a dividend play.

Adam Levy has no position in any stocks mentioned. The Motley Fool recommends Cypress Semiconductor. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.