Up almost 3x from its low in March 2020, at the current price of $137 per share, we believe Synaptics Incorporated stock (NASDAQ: SYNA) has further upside potential. Synaptics, a human interface hardware and software developer, has seen its stock rise from $47 to $137 off its March 2020 low, much more than the S&P which increased by over 85% from its lows. Further, the stock is up around 70% from the level it was at before the pandemic. However, we believe that Synaptics stock could rise around 10% to set fresh highs above $150, driven by expectations of steady demand growth and strong Q3 2021 results. Our dashboard What Factors Drove 269% Change In Synaptics Stock Between 2018 And Now? has the underlying numbers behind our thinking.

Synaptics stock’s rise since late 2018 came despite a 21% drop in revenues from $1.63 billion in FY 2018 to $1.29 billion in FY 2020 (Synaptics’ fiscal year ends in June). Combined with a 3.5% rise in the outstanding share count, RPS (revenue-per-share) dropped 24% from $47.70 to $36.40 over this period.

However, Synaptics’ P/S (price-to-sales) multiple rose from 0.8x in 2018 to 2.5x by 2020 end, and has further risen to 3.8x currently. We believe that the company’s P/S ratio has the potential to rise further in the near term on expectations of continuing demand growth and a favorable shareholder return policy, thus driving the stock price higher.

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