Synopsys’ Q3 Results Surpass Estimates; Shares Rise 4%

Shares of electronic design automation company Synopsys, Inc. (SNPS) jumped about 4% to close at $302.10 in Wednesday’s extended trade after the company reported better-than-expected results for its third quarter ended July 31, 2021.

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Quarterly revenues jumped 9.6% year-over-year to $1.06 billion and surpassed the Street’s estimate of $1.05 billion. Revenues from Time-based products, and Maintenance and Service grew 8.7% and 33.4% year-over-year, respectively, boosting the overall growth in revenues.

Quarterly earnings per share (EPS) grew 4% year-over-year to $1.81 from $1.74. Moreover, the figure surpassed the consensus estimate of $1.78 per share.

For Fiscal Year 2021, the company expects to report revenues in the range of $4.19 billion to $4.22 billion. The consensus estimate for the same is pegged at $4.08 billion. Similarly, the company anticipates earnings for Fiscal Year 2021 to be in the range of $6.78 to $6.83 per share. The consensus for the same stands at $6.48 per share.

The Chairman of Synopsys, Aart de Geus, said, “Vibrant markets, unparalleled technology innovations, and strong execution position us to continue to increase shareholder value going forward. As we look to next year and beyond, we are aiming at crossing $5 billion in revenue by 2023, with double-digit annual revenue growth and continuing margin expansion.” (See Synopsys stock chart on TipRanks)

Last week, Wells Fargo analyst Gary Mobley reiterated a Buy rating on the stock. The analyst, however, raised the price target to $325 from $310, which implies 11.8% upside potential from current levels.

Consensus among analysts is a Strong Buy based on 5 unanimous Buys. The average Synopsys price target of $326.4 implies upside potential of 12.3% from current levels.

Synopsys scores a 7 out of 10 from TipRanks’ Smart Score rating system, indicating that the stock is likely to perform in line with market expectations. Shares have gained 46.6% over the past year.