Investing.com -- Synaptics Incorporated (NASDAQ:SYNA) reported fiscal third quarter results that topped Wall Street estimates, but it slashed its annual outlook amid an economic slowdown that is putting margins under pressure.
Synaptics shares are down over 21% in pre-open Thursday, following the report.
Synaptics reported EPS of $1.89 on revenue of $326.6 million, topping estimates of $1.86 on revenue of $325.48M.
The beat on the top and bottom lines, however, was overshadowed by gloomy guidance as slowing economic growth weighs on guidance.
"Customer forecasts are being moderated in response to the current economic slowdown," the company said, adding that customers are still working through excess inventories.
"As a result, we expect our June quarter revenue to decline sequentially, and we have begun to implement spending," the company warned.
Looking ahead, the company cut its outlook on revenue to a range of $210M to $240M from $310M to $340M previously, while gross margin was also slashed to 44-47% from 52-55% previously.
Susquehanna analysts said the investors didn't get what they were looking for - the downcycle bottom.
"Despite the near-term setback, we continue to reiterate our long-term "Transcending Commoditization" thesis as Synaptics still remains in the "middle innings" of successfully executing a bona-fide turnaround and is deserving of a multiple re-rating when growth returns. But this will clearly take some time. We reiterate our Positive rating but reduce our price target from $140 to $115," the analysts said in a note.
Mizuho analysts slashed the target to $130 and also remains positive as valuation is attractive at these levels.
"We see SYNA still well-positioned to benefit from secular IoT tailwinds and while Consumer/ Enterprise weakness is an overhang, believe SYNA is attractive," the analysts wrote.