KeyBanc analyst Jason Celino has reduced the price target for Synopsys (SNPS, Financial) from $575 to $540, maintaining an Overweight rating on the stock. This adjustment follows new export restrictions related to China. Despite the limited details available at the moment, KeyBanc plans to uphold its current estimates until more information becomes accessible.
KeyBanc's analysis suggests a potential impact on Synopsys's earnings per share (EPS), forecasting a downside of $1.66 for FY25 and $3.81 for FY26. While the firm continues to support the notion that electronic design automation (EDA) tools will sustain growth in the low double digits due to diverse and robust growth drivers, it acknowledges the immediate risks posed by the China-related issues.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 21 analysts, the average target price for Synopsys Inc (SNPS, Financial) is $592.94 with a high estimate of $707.78 and a low estimate of $502.41. The average target implies an upside of 27.20% from the current price of $466.15. More detailed estimate data can be found on the Synopsys Inc (SNPS) Forecast page.
Based on the consensus recommendation from 21 brokerage firms, Synopsys Inc's (SNPS, Financial) average brokerage recommendation is currently 1.9, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Synopsys Inc (SNPS, Financial) in one year is $626.71, suggesting a upside of 34.44% from the current price of $466.15. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Synopsys Inc (SNPS) Summary page.
SNPS Key Business Developments
Release Date: May 28, 2025
- Revenue: $1.6 billion, up 10% year over year.
- Non-GAAP Operating Margin: 38%.
- Non-GAAP EPS: $3.67, including a $0.28 benefit from a building sale and $0.06 net charges from bond issuance.
- Backlog: $8.1 billion, up $400 million quarter-on-quarter.
- Design Automation Revenue: $1.12 billion, up 6% year over year.
- Design IP Revenue: $492 million, up 21% year over year.
- Free Cash Flow: Approximately $220 million.
- Cash and Short-term Investments: $14.3 billion.
- Debt: $10.1 billion.
- Full-Year Revenue Guidance: $6.745 billion to $6.805 billion.
- Full-Year Non-GAAP EPS Guidance: $15.11 to $15.19 per share.
- Q3 Revenue Guidance: $1.755 billion to $1.785 billion.
- Q3 Non-GAAP EPS Guidance: $3.82 to $3.87 per share.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Synopsys Inc (SNPS, Financial) reported a strong second quarter with a 10% year-over-year revenue increase, exceeding the midpoint of their guidance.
- The company maintained its full-year revenue guidance, demonstrating the strength and resilience of its business model.
- Design IP segment revenue increased by 21% year over year, driven by strong demand for high-speed SerDes IP and other interface IP.
- Synopsys Inc (SNPS) is leading in AI for chip design, with significant customer adoption of its AI capabilities, including DSO.ai and VSO.ai.
- The company is confident in closing its pending acquisition of Ansys, which will enhance its AI-powered silicon to system design solutions.
Negative Points
- Synopsys Inc (SNPS) is experiencing a decline in revenue from China due to macroeconomic conditions and export restrictions.
- The company faces potential regulatory challenges in securing China regulatory clearance for its Ansys acquisition.
- There is uncertainty regarding the impact of potential BIS export restrictions on Synopsys Inc (SNPS)'s sales to China.
- The macroeconomic environment remains dynamic, with non-AI end market demand remaining subdued.
- The company has issued a $10 billion bond, which has resulted in net interest expenses impacting its financials.
