Shares of Synopsys soared Thursday after the maker of semiconductor design software handily beat analyst estimates for its fiscal second quarter. SNPS stock also got a lift after it raised its outlook for the current quarter and full fiscal year.
Thanks to robust semiconductor and electronics market demand, the Mountain View, Calif.-based company reported late Wednesday that it earned an adjusted $2.50 a share on sales of $1.28 billion in the quarter ended April 30. Analysts polled by FactSet expected Synopsys to earn $2.37 a share on sales of $1.26 billion. On a year-over-year basis, Synopsys earnings jumped 47% while sales climbed 25%.
For the current quarter ending July 31, Synopsys predicted adjusted earnings of $2.04 a share on sales of $1.225 billion. That's based on the midpoint of its guidance. Analysts were looking for fiscal third-quarter earnings of $1.61 a share on sales of $1.137 billion, according to FactSet.
For the full fiscal year ending Oct. 31, Synopsys guided to adjusted earnings of $8.67 a share on sales of $5.025 billion. Wall Street had estimated earnings of $7.91 a share on sales of $4.813 billion.
SNPS Stock Rises After Report
On the stock market today, SNPS stock surged 10.2% to close at 300.52.
"Synopsys delivered an outstanding fiscal second quarter, exceeding our guidance targets with strength across all product groups and geographies," Chief Executive Aart de Geus said in a news release. "Based on strong first half execution and confidence in our business, we are raising our full-year targets substantially."
He added, "For fiscal 2022, we expect to grow annual revenue approximately 20% and pass the $5 billion milestone, drive further operating margin expansion, grow earnings per share by more than 25%, and generate approximately $1.6 billion in operating cash flow."
Electronic design automation stocks like Synopsys look like a safe place to hide in a bear market, Needham analyst Charles Shi said in a note to clients. He reiterated his buy rating on SNPS stock and raised his price target to 380 from 370.
SNPS Stock Is Long-Term Leader
Since its last earnings report three months ago, Synopsys has announced a joint venture and an acquisition.
On April 4, Synopsys and Juniper Networks disclosed they had formed a separate company to pursue the fast-growing silicon photonics market. The new company will provide an open silicon photonics platform for telecom, data communications, lidar, high-performance computing and other applications.
On April 27, Synopsys announced a deal to buy WhiteHat Security, a leading provider of application security software-as-a-service, for $330 million in cash.
SNPS stock ranks second out of 12 stocks in IBD's Computer Software-Design industry group, according to IBD Stock Checkup. It has an IBD Composite Rating of 84 out of 99. The Composite Rating scores a stock's key growth metrics against all other stocks regardless of industry group.
SNPS stock is in the IBD Long-Term Leaders Portfolio.
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