Synopsis (SNPS) is a term commonly used in the cinematic industry or theater to describe a plot summary, intentions, and vision. However, our Synopsis is a well-established semiconductor company, also, with clear intentions and vision. Its prestigious list of clientele includes Mercedes-Benz Group (MBGAF) and Volvo (VLVLY) in the automotive industry and Intel (INTC), Qualcomm (QCOM), and Nvidia (NVDA) in the semiconductor sector. It’s one of the largest software companies in the world, with a market cap just shy of $80 billion. It’s not well-known like its counterparts, Nvidia, TSMC (TSM), or Broadcom (AVGO), but it has been a winning stock for years.
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In the last five years, for example, SNPS stock has risen over 282%, and if we go back even further, we find the results more impressive. The stock has climbed modestly in the last year but remained upward, increasing by only 7.93%. Although its valuation seems a bit steep with a P/E of 52.6, it is considered a Strong Buy on Wall Street, and for good measures.
Our writer at Tipranks, Marc Guberti, has written his bullish position on the SNPS stock, and you can read it right here.
For now, let’s explore 3 talking points as to why Synopsis is so well-liked by investors:
- Key Role in the AI Industry: Thanks to its advanced chip design tools, Synopsys plays a key role in the AI revolution of the tech, vehicle, and data service sectors. Despite a sharp correction in July – August, the stock remains on the up. The AI industry’s projected 19.3% CAGR until 2034 highlights the potential for consistent growth, meaning the stock’s recent decline could present an opportunity for investors to get in for a relative discount.
- Strong Financial Performance: Synopsys has consistently delivered positive financial results, with recent third-quarter revenue increasing by 13% year-over-year to $1.526 billion and GAAP net income rising by 27% to $425.9 million. Also, SNPS is on track to exceed $6 billion in revenue for Fiscal 2024. These numbers strengthen the bullishness for the stock, as despite last quarter’s impressive results, the stock price has remained flat since, keeping it relatively cheap. The firm’s role in AI-reliant industries like autonomous vehicles, cloud computing, 5G, and smart devices further enhances its growth potential.
- .Acquisitions and Market Position The acquisition of Ansys (ANSS) is another reason why investors are fond of SNPS stock. This merger, expected to finalize in the first half of 2025, promises to advance Synopsys’ position in the market and drive further revenue and net income growth. Also, the company’s decision to sell its optical solutions group for regulatory approval of the acquisition showcases its strategic vision.
What Is SNPS Price Target?
On Wall Street, Synopsis is a Strong Buy, with 10 Buys, 0 Holds, and 0 Sells. The average price target for SNPS stock is $650.56, reflecting 22.66% upside.
Conclusion
Synopsis is a well-established semiconductor company with some of the biggest firms in the world as customers. Its recent acquisition of Ansys can also take it one step closer to a $100 billion market cap. Although its name originates from the classical Greek theater, its true dramatic power lies within its software capabilities, not on the stage. This is something that most investors like, which is going about their business without noise and too much drama.
