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Sunnyvale, California-based Synopsys, Inc. (SNPS) is a leading provider of electronic design automation (EDA) software with a market capitalization of $77.4 billion. The company is recognized for its cutting-edge solutions in the semiconductor industry, playing a vital role in helping companies design and verify advanced chips and systems.
Shares of SNPS have underperformed the broader market over the last year. The stock has dropped 9.9% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 23%. In 2025, the stock has gained 1.8%, compared to SPX's 4% gains on a YTD basis.
Narrowing the focus, SNPS also struggled to keep up with the iShares Expanded Tech-Software Sector ETF (IGV). The exchange-traded fund has gained 23.1% over the past year and 3.9% on a YTD basis.
Synopsys reported its Q4 earnings on Nov. 4, delivering results that surpassed expectations, yet shares of SNPS plummeted 12.4% in the next trading session. Revenue rose 11.5% year-over-year to $1.6 billion, slightly beating consensus estimates, while EPS climbed 13.3%, exceeding Wall Street projections. Strong revenue growth and improved adjusted operating margins in the Electronic Design Automation (EDA) segment contributed to the solid performance.
However, Synopsys’ subdued revenue outlook for fiscal 2025, projecting between $6.745 billion and $6.805 billion, overshadowed its strong earnings performance and triggered the stock’s sharp decline.
For the current fiscal year ending in October, analysts expect SNPS’ EPS to grow 3.8% to $10.64 on a diluted basis. The company's earnings surprise history is sound. It consistently beat the consensus estimate in all the past four quarters.
Among the 18 analysts covering SNPS stock, the consensus rating is a “Strong Buy.” That’s based on 15 “Strong Buy” ratings, one “Moderate Buy,” and two “Hold.”
This consensus is more bullish than two months ago, when 14 analysts suggested a “Strong Buy” for the stock.
On Jan. 13, Redburn Atlantic initiated coverage on Synopsys with a “Buy” rating and a $600 price target, citing its leadership in Electronic Design Automation (EDA). The firm outlined three key structural growth drivers for the EDA market through the decade: increasing ASIC/hyperscaler design flows, monetization of GenAI tools, and the rise of multi-die designs.
The mean price target of $642.44 represents a 30.1% premium to SNPS’ current price levels. The Street-high price target of $699 suggests an upside potential of 41.5%.
