Shares of Synopsys Inc (NASDAQ:SNPS) rallied in early trading on Thursday, after the company reported upbeat fiscal third-quarter results.
Here are some key analyst takeaways:
- Rosenblatt Securities analyst Blair Abernethy reiterated a Buy rating and price target of $410.
- Needham analyst Charles Shi reiterated a Buy rating and price target of $580.
- Benchmark analyst Gary Mobley maintained a Buy rating and price target of $570.
Check out other analyst stock ratings.
Rosenblatt Securities: Synopsys posted solid quarterly results, exceeding the high end of its revenue, margin, and earnings guidance ranges, Abernethy said in a note. Revenue grew 42% year-on-year to $2.48 billion, with upside being driven by contribution from the Ansys acquisition and outperformance in Design Automation, he added.
Management indicated that the Ansys acquisition is tracking ahead of cost synergy expectations at the time of the deal, the analyst noted. The company’s updated revenue guidance for the full year reflects 38% growth, with Ansys contributing around $2.98 billion and growing 9.5% in the fourth quarter, he further stated.
Needham: Synopsys’ revenue grew 9% sequentially, with Electronic Design Automation (EDA) up 10% and Ansys growing 9%, Shi said. Design automation posted record hardware revenue, he added.
"For Ansys, semiconductors, aerospace and industrial were particularly strong as these industries continued to upgrade their digital engineering capabilities," the analyst wrote. For the fiscal fourth quarter, management guided to revenue of $2.56 billion, representing 3% sequential growth, with EDA expected to resume double-digit year-on-year growth, he further stated.
Benchmark: Given that Synopsys’ stock already reflected a negative revision to estimates, it was surprising that it came under pressure following the release of results, Mobley said. He added that this reaction was particularly unexpected since:
- The company delivered a clean beat-and-raise quarter
- The results were a validation that "AI is a tailwind to EDA/simulation software," rather than a headwind
The analyst highlighted the following from the print:
- Strong chip design activity resulted in upside to the company’s core EDA business
- Growing interest in its agentic AI workflows
- Ansys business is performing better than expected
The midpoints of management’s fourth-quarter revenue and earnings guidance of $2.555 billion and $4.13 per share came in ahead of consensus estimates of $2.552 billion and $4.00 per share, he further stated.
SNPS Price Action: Shares of Synopsys had risen by 8.79% to $446.02 at the time of publication on Thursday.
Image: Shutterstock
Login to comment