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Sunnyvale, California-based Synopsys, Inc. (SNPS) provides electronic design automation software products used to design and test integrated circuits. Valued at a market cap of $84.2 billion, the company offers a full suite of products used in the logic synthesis and functional verification phases of chip design, including a broad array of reusable design building blocks. It is expected to announce its fiscal Q1 earnings results on Wednesday, Feb. 19.
Prior to this event, analysts expect the software company to report a profit of $1.86 per share, down 35.9% from $2.90 per share in the year-ago quarter. The company has a solid track record of consistently beating Wall Street's bottom-line estimates in the last four quarters. Its earnings of $2.46 per share in the previous quarter outpaced the forecasted figure by roughly 2.1%.
For fiscal 2025, analysts expect Synopsys to report an EPS of $10.64, up 3.8% from a profit of $10.25 in fiscal 2024.
Shares of SNPS have marginally increased over the past 52 weeks, significantly lagging behind both the S&P 500 Index's ($SPX) 25.5% return and the Technology Select Sector SPDR Fund’s (XLK) 19.8% rise over the same time frame.
Synopsys released its Q4 earnings results on Nov. 4, and shares of SNPS crashed 12.4% the following day despite delivering better-than-expected performance. The company’s revenue improved 11.5% from the year-ago quarter to $1.6 billion and marginally surpassed the consensus estimates. Meanwhile, its EPS also grew 13.3% year-over-year and exceeded Street estimates. Notable revenue and adjusted operating margin growth in the company’s Electronic Design Automation (EDA) segment aided the results.
However, Synopsys’ lackluster revenue outlook for fiscal year 2025, which indicates revenues to range between $6.745 billion and $6.805 billion, overshadowed the positives and led to the stock’s sharp fall.
Wall Street analysts are strongly optimistic about SNPS’ stock, with a "Strong Buy" rating overall. Among 18 analysts covering the stock, 15 recommend a "Strong Buy," one suggests a “Moderate Buy,” and two indicate “Hold.” This configuration is more bullish than three months ago, with 13 analysts suggesting a “Strong Buy” rating.
The mean price target for Synopsys is $641.89, which indicates a 16.4% potential upside from the current levels.
