Shares of Synopsys Inc (NASDAQ:SNPS) are likely to report its fiscal second-quarter results on Wednesday, in line with or "marginally better" than estimates, according to Rosenblatt Securities analyst Blair Abernethy.
The Synopsys Analyst: Abernethy maintained a Buy rating and raised the price target from $530 to $575.
The Synopsys Thesis: The Ansys acquisition is largely driving Synopsys’ revenue growth, with total revenue of $2.25 billion, Abernethy said. That’s up around 40% year-on-year and within the guidance range of $2.225-$2.275 billion,
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This would be the third quarter in which Synopsys recognizes revenue contribution from the Ansys acquisition.
"Besides Ansys, we expect Q2 growth driven by EDA demand, elevated chip R&D spending, IC design complexity, new hyperscaler and systems AI chip programs," the analyst wrote.
Other estimates for the fiscal second quarter include:
- Non-GAAP operating margin of 38%, in-line with Street expectations
- Non-GAAP earnings of $3.13 per share, below consensus of $3.15 per share, but within the guidance range of $3.11-$3.17 per share.
He expects higher adoption of Synopsys.ai to increasingly contribute to growth, and for China revenue to improve in the back half of the year, supported by market recovery and the U.S. lifting prior trade constraints.
Abernethy also expects management to guide to full-year revenue of $9.608 billion, representing 36% growth versus the consensus of 36.5%.
Synopsys Q1 Results
- Total revenue of $2.409 billion, coming in at the high end of its guidance range.
- Non-GAAP earnings of $3.77 per share, topping expectations.
- Non-GAAP operating margin of $1 billion.
- Operating margin of 42.1.
- Free cash flows of around $822 million.
Price Action
Shares of Synopsys had risen by 1.95% to $534.97 at the time of publication on Tuesday.
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