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Synopsys (SNPS)
NASDAQ:SNPS
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Synopsys
(NASDAQ:SNPS)63Neutral
Positive Factors
AI and R&D investment
SNPS AI-enabled tools provide significant design optimizations for customers with the recent rise of agentic AI potentially opening the door to more R&D spend.
Hardware demand
A recent portfolio refresh for hardware is leading to improved demand, contributing positively to growth.
Negative Factors
China market challenges
Management downticked the China outlook and now sees China revenue percentage falling this year.
Synopsys (SNPS) vs. S&P 500 (SPY)
Market Cap
$68.88B
Dividend YieldN/A
Average Volume (3M)1.23M
Price to Earnings (P/E)32.9
Beta (1Y)1.69
Revenue Growth-1.19%
EPS Growth48.33%
CountryUS
Employees20,000
SectorTechnology
Sector Strength48
IndustrySoftware
Share Statistics
EPS (TTM)13.52
Shares Outstanding154,620,070
10 Day Avg. Volume1,719,541
30 Day Avg. Volume1,230,460
Financial Highlights & Ratios
PEG Ratio0.68
Price to Book (P/B)N/A
Price to Sales (P/S)11.29
Price to Cash Flow (P/CF)-254.00
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$620.30Price Target Upside39.25% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering10
Synopsys Business Overview & Revenue Model
Company DescriptionSynopsys, Inc. is a leading global supplier of electronic design automation (EDA) software and services. Operating primarily in the technology and semiconductor sectors, Synopsys provides solutions for designing and verifying advanced silicon chips, as well as for developing and testing software that runs on these chips. The company's core products include EDA tools, IP products, and software integrity solutions which aid in the efficient creation and management of complex integrated circuits and systems-on-chips (SoCs).
How the Company Makes MoneySynopsys generates revenue primarily through the sale of software licenses, maintenance and service contracts, and consulting services. Its electronic design automation tools and intellectual property products are licensed to semiconductor companies, enabling them to design and verify chip designs more efficiently. Synopsys also earns from its software integrity solutions, which help organizations improve the security and quality of their software code. The company's revenue model includes a combination of time-based licenses, which provide recurring revenue, and upfront perpetual licenses. Additionally, significant partnerships with leading technology companies and continued investment in research and development contribute to Synopsys' earnings by driving innovation and expanding its product offerings.
Synopsys Financial Statement Overview
Summary
Synopsys demonstrates strong financial performance with robust revenue growth, excellent profitability margins, and effective cash flow management. The balance sheet is solid, with low leverage and a high equity ratio, minimizing financial risks.Income Statement
Synopsys shows robust financial performance with a consistent increase in total revenue, evidenced by a significant revenue growth rate of 4.87% from 2023 to 2024. The company's gross profit margin stands at 79.68%, highlighting strong cost control and profitability. The net profit margin of 36.95% is impressive, indicating efficient operations and high profitability. EBIT and EBITDA margins are solid at 22.12% and 22.12%, respectively, demonstrating effective management of operating expenses.90
Very Positive
Balance Sheet
The balance sheet reflects financial strength with a low debt-to-equity ratio of 0.08, suggesting conservative leverage and financial stability. Return on equity is robust at 25.18%, indicating high profitability and effective use of equity. The equity ratio of 68.77% showcases a strong equity base relative to total assets, enhancing the company's financial stability and risk profile.85
Very Positive
Cash Flow
Synopsys has a strong cash flow position with a free cash flow to net income ratio of 0.57, underlining efficient cash generation relative to profits. The operating cash flow to net income ratio of 0.62 indicates healthy cash flow from operations. Although the free cash flow growth rate is -15.07%, the company maintains substantial free cash flow, supporting capital expenditure and financing activities.88
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 6.13B | 5.84B | 5.08B | 4.20B | 3.69B | Gross Profit |
| 4.88B | 4.62B | 4.02B | 3.34B | 2.89B | EBIT |
| 1.36B | 1.27B | 1.16B | 734.79M | 620.14M | EBITDA |
| 1.36B | 1.65B | 1.44B | 1.10B | 857.40M | Net Income Common Stockholders |
| 2.26B | 1.23B | 984.59M | 757.52M | 664.35M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 4.05B | 1.59B | 1.57B | 1.58B | 1.24B | Total Assets |
| 13.07B | 10.33B | 9.42B | 8.75B | 8.03B | Total Debt |
| 684.46M | 687.80M | 656.37M | 666.77M | 663.49M | Net Debt |
| -3.21B | -751.11M | -761.24M | -766.07M | -572.16M | Total Liabilities |
| 4.05B | 4.15B | 3.86B | 3.45B | 3.12B | Stockholders Equity |
| 8.99B | 6.15B | 5.52B | 5.30B | 4.91B |
| Cash Flow | Free Cash Flow | |||
| 1.28B | 1.51B | 1.60B | 1.40B | 832.55M | Operating Cash Flow |
| 1.41B | 1.70B | 1.74B | 1.49B | 991.31M | Investing Cash Flow |
| 1.22B | -482.10M | -572.62M | -549.03M | -360.42M | Financing Cash Flow |
| -181.30M | -1.20B | -1.12B | -748.75M | -140.61M |
Synopsys Technical Analysis
Negative
445.47
Price Trends
502.78
Negative
516.79
Negative
533.09
Negative
Market Momentum
-18.68
Positive
32.09
Neutral
11.18
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SNPS, the sentiment is Negative. The current price of 445.47 is below the 20-day moving average (MA) of 496.31, below the 50-day MA of 502.78, and below the 200-day MA of 533.09, indicating a bearish trend. The MACD of -18.68 indicates Positive momentum. The RSI at 32.09 is Neutral, neither overbought nor oversold. The STOCH value of 11.18 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SNPS.
Synopsys Risk Analysis
Synopsys disclosed 29 risk factors in its most recent earnings report. Synopsys reported the most risks in the “Tech & Innovation” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Synopsys Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $2.89T | 31.30 | 30.64% | 0.81% | 15.04% | 12.38% | |
78 Outperform | $193.98B | 35.94 | 39.42% | ― | 11.02% | 4.96% | |
69 Neutral | $58.46B | ― | -41.70% | ― | 29.21% | -51.47% | |
66 Neutral | $66.26B | 62.61 | 22.58% | ― | 13.48% | 0.66% | |
66 Neutral | $29.21B | 49.73 | 9.46% | ― | 12.11% | 14.35% | |
63 Neutral | $68.88B | 32.94 | 22.68% | ― | -1.19% | 48.33% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% |
* Technology Sector Average
Performance Comparison
SNPS
Synopsys
445.47
-119.79
-21.19%
ADBE
Adobe
446.03
-98.81
-18.14%
ANSS
Ansys
323.22
-5.57
-1.69%
CDNS
Cadence Design
241.29
-66.41
-21.58%
MSFT
Microsoft
388.61
-10.99
-2.75%
SNOW
Snowflake
173.60
5.85
3.49%
Synopsys Earnings Call Summary
Earnings Call Date: Feb 26, 2025 | % Change Since: -5.31% | Next Earnings Date: May 21, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mix of positive achievements and underlying challenges. Synopsys demonstrated strong performance in key markets like AI and HPC, launched successful new products, and maintained robust EDA software growth. However, the company faced revenue declines in specific segments and challenges in the China market, highlighting areas of concern.Highlights
Exceeding Revenue and EPS Guidance
Synopsys exceeded the midpoint of its Q1 revenue guidance and delivered non-GAAP EPS above its guidance range, despite challenges such as one less work week in the quarter.
Robust AI and HPC Markets
AI and HPC markets remained strong, driving significant design activity and growth opportunities for Synopsys.
Successful Product Launches
Synopsys launched new HAPS 200 prototyping systems and ZeBu 200 emulation systems with up to 2x better performance, strengthening its leadership in hardware-assisted verification.
Strong EDA Software Growth
EDA software segment saw strong design activity at advanced nodes, with significant projects and tape-outs at 2-nanometer technology.
AI-Driven Innovations
Synopsys.ai adoption continues to grow, with notable productivity improvements and competitive displacements in key accounts.
Lowlights
Revenue Decline in Certain Segments
Overall Q1 revenue was down 4% year-over-year, and non-GAAP EPS was down 10% due to fewer work weeks.
Challenges in China
Synopsys faced headwinds in China, with expectations of China growth below the corporate average due to economic deceleration and restrictions.
IP Revenue Fluctuations
Design IP revenue was down 17% year-over-year, highlighting fluctuations and challenges in this segment.
Company Guidance
During the Synopsys earnings call for the first quarter of fiscal year 2025, the company provided detailed guidance and results, showcasing strong performance despite challenges in certain markets. Synopsys exceeded the midpoint of its Q1 revenue guidance with a total revenue of $1.46 billion, although this represented a 4% year-over-year decline due to one less work week. The non-GAAP EPS also surpassed expectations, despite a 10% decline from the previous year. The company reaffirmed its fiscal year 2025 targets, projecting revenue between $6.745 billion and $6.05 billion, with a non-GAAP operating margin of 40% and non-GAAP EPS between $14.88 and $14.96. Q2 targets include revenue between $1.585 billion and $1.615 billion, with a non-GAAP EPS of $3.37 to $3.42. Synopsys highlighted robust growth in AI and HPC sectors, while facing headwinds in industrial, automotive, and consumer electronics markets, particularly in China. The pending acquisition of ANSYS, expected to close in the first half of 2025, is anticipated to bolster AI-powered design solutions. The company emphasized significant advancements in hardware-assisted verification and EDA software, noting strong demand for their new HAPS 200 and ZeBu 200 systems, and AI-driven capabilities enhancing productivity, with potential for a paradigm shift in design workflows through agent AI.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.