Chip design software maker Synopsys delivered better-than-expected earnings on in-line sales for its fiscal first quarter. But it guided lower than views for the current quarter. SNPS stock fell on the news Thursday.
The Mountain View, Calif.-based company late Wednesday said it earned an adjusted $2.62 a share on sales of $1.36 billion in the quarter ended Jan. 31. Analysts polled by FactSet had expected earnings of $2.50 a share on sales of $1.36 billion. On a year-over-year basis, Synopsys earnings rose 9% while sales advanced 7%.
For the current quarter ending April 30, Synopsys predicted adjusted earnings of $2.48 a share on sales of $1.375 billion. That's based on the midpoint of its guidance. Wall Street was forecasting earnings of $2.56 a share on sales of $1.43 billion in the fiscal second quarter.
For the fiscal year ending Oct. 31, Synopsys expects to earn an adjusted $10.57 a share on sales of $5.8 billion. Analysts had been looking for earnings of $10.38 a share on sales of $5.81 billion.
SNPS Stock Is A Recent Breakout
"Synopsys delivered a solid start to the year," Chief Executive Aart de Geus said in a news release. "Based on the continued robust design activity, we remain confident in our business."
On the stock market today, SNPS stock fell 5.2% to close at 359.71. During the regular session Wednesday, SNPS stock rose 0.9% to 379.48.
On Feb. 1, SNPS stock broke out of a cup-with-handle base at a buy point of 364.09, according to IBD MarketSmith charts.
No Fundamental Change In Demand
Needham analyst Charles Shi reiterated his buy rating on Synopsys after the report and raised his price target to 450 from 420.
"The company sees no fundamental change to its demand, but the guidance implies a more back-half loaded year than what we previously expected," Shi said in a note to clients. "However, we do not think SNPS is acting 'out of character' by maintaining the full-year outlook."
The company ranks fourth out of 12 stocks in IBD's Computer Software-Design industry group, according to IBD Stock Checkup. It has an IBD Composite Rating of 92 out of 99.
IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. The best growth stocks have a Composite Rating of 90 or better.
Also, SNPS stock is in the IBD Long-Term Leaders Portfolio, along with industry peer Cadence Design Systems.
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