Zeev's Turnips Patch-No Politics (ZEEV)

[marketmaven]

SYNA- Some rumors of AAPL press release today on internal sourcing

SYNA- Synaptics falls on Apple concerns
Bear Stearns' Neff cuts price target to $49 a share ($29?)
By Rex Crum, MarketWatch
Last Update: 4:07 PM ET Feb. 7, 2005

SAN FRANCISCO (MarketWatch) - Synaptics Inc. shares slumped almost 16 percent Monday after Bear Stearns analyst Andrew Neff cut his price target on the stock due to concerns about the touchpad-technology company's relationship with Apple Computer.

Synaptics (SYNA: news, chart, profile) , which makes touchpad technology for Apple and other computer companies, fell $6.23 to close at $33.30 amid a mixed day for tech stocks. Before the market opened, Neff cut his price target on Synaptics' stock to $49, from $53 a share, saying he made the move because the TrackPad in Apple's newly revamped line of PowerBook notebook computers doesn't come from Synaptics.

Neff said, in a research note, that "our concern is that TrackPad may signal a change in Apple's strategy whereby in the future Apple may source all of its interface solutions internally." While Synaptics has multiple deals in place with other computer and digital-music player makers, it is the San Jose, Calif.-based company's work with Apple which has brought it much attention of late. Apple (AAPL: news, chart, profile) uses Synaptics technology for the iPod's click wheel song-scrolling device, as well as for other Apple products.

However, Neff tempered his price-target cut by adding that even if Synaptics technology is not used in the PowerBook line, the loss represents just 2 percent of Synaptics total notebook revenue, and that such changes are common in this area of the PC market.

Neff left his rating on Synaptics unchanged at "outperform," and also maintained his forecast for the company's third-quarter results at a profit of 31 cents a share on $57 million in revenue.



Price Targets Mean Nothing, According to this FOOL
By Kelvin Taylor
February 8, 2005
http://www.fool.com/News/mft/2005/mft05020824.htm?source=eptyholnk303100&logvisit=y&npu=y

Investors are keenly aware that news can drive stock prices. When the news is good, stocks typically react positively by increasing in price. When the news is not so good -- OK, just plain bad -- stock prices can suffer. But what happens when the news is not really news? Read on for a case in point.

Shares of Synaptics (Nasdaq: SYNA) plunged 16% on Monday when an analyst from Bear Stearns cut his price target on the stock from $53 to $49. The analyst raised concerns that Apple Computer (Nasdaq: AAPL) won't be using the company's TrackPad technology in the newly revamped line of PowerBook notebook computers.

My first reaction was, "Is this really news?" The short answer is no. Here's why.

Last month Synpatics reported terrific numbers. At that time the Bear Stearns analyst raised his rating on the stock to "outperform." The same analyst also increased earnings and revenue numbers for the next two years on the grounds that the company benefited from stronger-than-expected iPod sales. Looking at the estimates for fiscal 2006, the growth in earnings is forecast to be about 23%. At $35 a share, Synaptics trades at a forward price-to-earnings ratio of 25, not expensive relative to other tech stocks. At $53 the price-to-earnings ratio rises to 38, still not exceedingly expensive.

During that same conference call, Synaptics' CEO stated revenues for the next quarter would be flat, as increased sales of digital music players are expected to counteract a typical decline in the notebook PC market during the period. Even if Synaptics technology is not used in the PowerBook line, the loss represents just 2% of the company's total notebook revenue. Portable music players, both from Apple and Creative Technology (Nasdaq: CREAF), account for much more of the revenue pie. Plus the focus for future sales of the TouchPad technology will be in the mobile phone markets, with handset manufacturers such as Nokia (NYSE: NOK) and Ericsson (Nasdaq: ERICY).

This brings me to my point. Should Foolish investors pay any attention to changes in so-called price targets promoted by analysts? Other than causing wild swings in the market, they change nothing about the fundamentals of the company and don't reflect the true value of the stock. Foolish investors shouldn't panic because of the price decline, and pay little -- if any -- attention to price targets. The stock is even more attractive now than before. That is the real news worth reading.

For more of my Foolishness check out Synaptics Has the Right Touch.