Synopsys (SNPS), a software company, is set to release its Q4 2024 results on December 4. Wall Street analysts expect the company to report earnings of $3.30 per share for Q3, up 4% year-over-year. Revenues are also expected to rise by 2.5% year-over-year, reaching $1.63 billion for the quarter.
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Interestingly, the stock is up about 10% this year, driven by strong demand for the company’s products in areas like artificial intelligence (AI) and the Internet of Things (IoT). Growing use of cloud computing has also boosted demand for Synopsys’s design tools, which are essential to creating the advanced chips that power cloud systems.
It’s worth noting that SNPS has had a strong track record when it comes to beating earnings. The company has surpassed estimates in all of the past nine quarters.
Analysts’ Opinions Ahead of Synopsys’ Q4 Earnings
Ahead of Synopsys’ Q4 results, most analysts have rated the stock as a Buy, with the exception of Wells Fargo’s Joseph Quatrochi, who initiated coverage with a Hold rating and a $570 price target.
Bullish analysts anticipate strong sales and bookings for the quarter, signaling continued momentum into the next fiscal year. They also view the Ansys acquisition as a significant opportunity, expecting it to expand Synopsys’s serviceable addressable market (SAM) by $10 billion.
However, Quatrochi expressed caution, pointing to uncertainty around the approval of the Ansys acquisition, which he believes could limit the stock’s short-term performance. While he acknowledges the deal’s potential to boost market opportunities, he is concerned about the potential dilution of earnings per share. Additionally, Quatrochi noted that while Synopsys is well-positioned to benefit from AI-enabled tools, broader financial gains from AI adoption may take time, prompting him to take a cautious stance.
What Do Options Traders Anticipate?
Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry, the Options tool does this for you.
Indeed, it currently says that options traders are expecting an 8.29% move in either direction.
Is SNPS a Good Stock to Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on SNPS stock based on seven Buys and one Hold rating assigned in the past three months, as indicated by the graphic below. The average SNPS price target of $641.25 per share implies 13.31% upside potential.
