Synopsys Positioned for Growth Amid Expanding EDA Market Opportunities

KeyBanc raised its price target on Synopsys (NASDAQ:SNPS) to $575 from $555 while maintaining an Overweight rating, citing a constructive risk-reward profile ahead of the company’s fiscal Q2 earnings report on May 28.

The firm expects results to be in line with or slightly ahead of consensus but believes investor focus will center on two key factors: management's commentary on China exposure and the status of the Ansys acquisition. Confidence in both areas could serve as catalysts.

KeyBanc views current market expectations as overly cautious, suggesting that reaffirmed 2025 guidance—driven by strength in IP and hardware segments—could ease concerns about any softness related to China. The Ansys deal, if merely delayed to the second half rather than scrapped, would further support sentiment.

With investors still pricing in more downside than warranted, the firm sees Synopsys as positioned for outperformance and has raised its target to reflect continued confidence in the company’s execution and outlook.

Redburn-Atlantic analysts initiated coverage on Synopsys (NASDAQ:SNPS) with a Buy rating and a price target of $600 on the stock. The report highlights the company’s strong positioning to capitalize on transformative trends within the Electronic Design Automation (EDA) industry.

Synopsys stands to benefit from a confluence of factors driving growth in the EDA sector. The increasing complexity and rising costs associated with developing advanced semiconductor solutions create a compelling need for cutting-edge design tools. Additionally, the addressable market is expanding as hyperscalers and OEMs bring more design processes in-house, further driving demand for Synopsys’s offerings.

According to the analysts, the integration of AI technologies into design workflows presents another lucrative growth avenue. Monetizing AI-powered solutions not only enhances the efficiency of design processes but also unlocks significant new revenue streams. Moreover, with the semiconductor market poised for a cyclical recovery, Synopsys is well-positioned to capture incremental gains from heightened activity across the industry.

The analyst's $600 price target reflects confidence in Synopsys's ability to leverage these tailwinds while maintaining its leadership position in EDA.

Synopsys (NASDAQ:SNPS) saw its stock drop over 7% in pre-market today after issuing weaker-than-expected guidance for the first quarter and fiscal year, overshadowing its solid fourth-quarter performance.

For Q4, Synopsys reported adjusted earnings per share of $3.40 on revenue of $1.64 billion, surpassing analyst expectations of $3.30 and $1.63 billion, respectively. Despite beating estimates, the outlook for the coming periods tempered investor enthusiasm.

For the first quarter, Synopsys projected adjusted EPS between $2.77 and $2.82, with revenue expected to range from $1.44 billion to $1.47 billion. This guidance fell short of analyst estimates, which anticipated EPS of $3.52 and revenue of $1.64 billion.

The company’s full-year forecast also disappointed. Synopsys predicted adjusted EPS in the range of $14.88 to $14.96 on revenue between $6.75 billion and $6.81 billion, below the Street consensus estimates of $14.89 in EPS and $6.91 billion in revenue.

Analysts from Morgan Stanley expressed concerns over the weaker guidance, noting that it marked a break from the positive momentum seen recently in Synopsys’ core EDA (Electronic Design Automation) business. They suggested that the disappointing outlook might dampen investor interest, especially following recent strength in the semiconductor sector.

Synopsys (NASDAQ:SNPS) saw its stock drop over 7% in pre-market today after issuing weaker-than-expected guidance for the first quarter and fiscal year, overshadowing its solid fourth-quarter performance.

For Q4, Synopsys reported adjusted earnings per share of $3.40 on revenue of $1.64 billion, surpassing analyst expectations of $3.30 and $1.63 billion, respectively. Despite beating estimates, the outlook for the coming periods tempered investor enthusiasm.

For the first quarter, Synopsys projected adjusted EPS between $2.77 and $2.82, with revenue expected to range from $1.44 billion to $1.47 billion. This guidance fell short of analyst estimates, which anticipated EPS of $3.52 and revenue of $1.64 billion.

The company’s full-year forecast also disappointed. Synopsys predicted adjusted EPS in the range of $14.88 to $14.96 on revenue between $6.75 billion and $6.81 billion, below the Street consensus estimates of $14.89 in EPS and $6.91 billion in revenue.

Analysts from Morgan Stanley expressed concerns over the weaker guidance, noting that it marked a break from the positive momentum seen recently in Synopsys’ core EDA (Electronic Design Automation) business. They suggested that the disappointing outlook might dampen investor interest, especially following recent strength in the semiconductor sector.

KeyBanc Capital increased its price target for Synopsys (NASDAQ:SNPS) from $540 to $600 per share. The firm maintained its Overweight rating on the stock ahead of the company’s earnings report on November 29.

KeyBanc anticipates that the software company will report better-than-expected results and subsequently raise its guidance. The analysts expect a possible modest revenue beat of around $5 million for Synopsys' fourth fiscal quarter, attributing this to ongoing strength in Intellectual Property (IP) and hardware segments.

The analysts also highlighted the importance of monitoring the company's backlog, which is expected to remain stable at around $7,100 million. Any figure above this would be considered a positive sign. Furthermore, they suggest that Synopsys is likely to provide a conservative initial revenue growth forecast for fiscal year 2024, in the range of 12-13%, and then increase this outlook as the year progresses.

KeyBanc Capital increased its price target for Synopsys (NASDAQ:SNPS) from $540 to $600 per share. The firm maintained its Overweight rating on the stock ahead of the company’s earnings report on November 29.

KeyBanc anticipates that the software company will report better-than-expected results and subsequently raise its guidance. The analysts expect a possible modest revenue beat of around $5 million for Synopsys' fourth fiscal quarter, attributing this to ongoing strength in Intellectual Property (IP) and hardware segments.

The analysts also highlighted the importance of monitoring the company's backlog, which is expected to remain stable at around $7,100 million. Any figure above this would be considered a positive sign. Furthermore, they suggest that Synopsys is likely to provide a conservative initial revenue growth forecast for fiscal year 2024, in the range of 12-13%, and then increase this outlook as the year progresses.