Synopsys Inc (NASDAQ:SNPS) is likely to report third-quarter results broadly in line, with 40% year-on-year revenue growth largely driven by the Ansys acquisition, according to Rosenblatt Securities analyst Blair Abernethy.
The Synopsys Analyst: Abernethy reiterated a Buy rating and price target of $575.
The Synopsys Thesis: Recent competitor results suggest "supportive EDA semi/systems technology development trends," while the company also likely continued to witness the steady adoption of its expanding Synopsys.ai product set, Abernethy said in the note.
Check out other analyst stock ratings.
Expectations For Q3: The chip design and verification company is likely to report the following for the fiscal third quarter:
- Total revenue of $2.435 billion, up around 40% year-on-year, versus consensus of $2.438 billion.
- Non-GAAP operating margin of 40%, in-line with consensus.
- Non-GAAP earnings of $3.66 per share, versus consensus of $3.67 per share.
"We expect Q3 growth to be driven by EDA demand, elevated chip R&D spending, IC design complexity, and new hyperscaler and systems company AI chip programs," Abernethy wrote.
Continued adoption of the Synopsys.ai products is likely to be "an increasing tailwind to growth" over the next few years, with 20 customers evaluating agentic EDA in the second quarter, the analyst stated.
He expects China revenue to "incrementally improve" in the back half of the year, "supported by market recovery and the easing of US trade disruptions."
The Ansys acquisition, completed in July 2025, drove around 29% of total revenue in the fiscal second quarter and Synopsys will provide details of the next phase of the Ansys integration at its Investor Day on September 30, along with an update on its medium-term operating targets and Agentic AI product strategy, the analyst noted.
For fiscal 2026, Abernethy said he expects revenue growth of 37% to $9.664 billion, slightly lower than consensus of $9.682 billion.
SNPS Price Action: Shares of Synopsys had risen by 1.71% to $401.25 at the time of publication on Tuesday.
Image: Shutterstock
Login to comment