Why Synaptics Jumped 10.2% in February

By Markets Fool.com

Continue Reading Below

SYNA data by YCharts

What:Shares of touchscreen manufacturerSynapticsjumped 10% in February according toS&P Capital IQdata. Favorable news regarding new products helped offset slowing top-line growth the company produced last quarter and bearish commentary from the company regarding fiscal year growth from levels the company earlier expected.

So what: Early in the month, Synaptics announced it was collaborating with auto-supplier Valeo to produce an automotive touchscreen with both force-sensing technology and haptic feedback. Apple has led in both technologies with 3D Touch present on the newest generation iPhone 6s and iPhone 6s Plus lines and haptic feedback on the Apple Watch, Synaptics recently unveiled its Clear Force technology that performs these same functions as an out-of-the-box solution for Android manufacturers.

Incorporating force-sensing technology into the car seems a logical extension for a company trying to get its technology into as many applications as possible. Later in the month, Synaptics also reported it partnered with China's BYD Automotive to put these force-sensing touchscreens in BYD's vehicles.

Additionally, Synaptics introduced another product -- an ultra-slim next-gen fingerprint sensor. The Natural ID FS4304 is a biometric fingerprint sensor that is only 3.5mm wide. As a result of the small footprint, Synaptics fingerprint sensor can be integrated onto side-mounted buttons like the volume controls, saving phonemakers valuable display space.

Continue Reading Below

Now what: For Synaptics, the question is will the new automotive business and next-gen features help the company offset mobile weakness? Last quarter, the company estimated 87% of its business came from its mobile business which includes tablet and smartphone sales. As a semi-finished product manufacturer, the company benefits from healthy growth in those markets. More recently, tablet sales have started to decline and smartphone sales have tremendously slowed.

Synaptics can offset weakness in these categories by getting its technology into a larger percentage of phones. I expect force-touch technology to become a standard part of the user experience, bolstering the company's Clear Force solution. Additionally, look for the company to report growth in automobiles going forward as the shift toward smart cars and connected cars is slowly but surely occurring.

The article Why Synaptics Jumped 10.2% in February originally appeared on Fool.com.

Jamal Carnette owns shares of Apple and Synaptics. The Motley Fool owns shares of and recommends Apple. 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.