Synopsys (NASDAQ:SNPS) stock gained over 4% in yesterday’s extended trading session after the company delivered stellar results for the fiscal first quarter. The company’s quarterly performance benefitted from a strong demand for artificial intelligence (AI) chips.
SNPS is a software company that develops electronic products and software applications in the electronic design automation (EDA) industry.
Financial Highlights
The company reported revenues of $1.65 billion, up 21% year over year. The results surpassed the Street’s estimate of $1.60 billion. Similarly, earnings came in at $3.56 per share, which exceeded analysts’ EPS expectations of $3.43 and increased 35.9% year-over-year.
Segment-wise, Design Automation revenues, which include AI-driven EDA solutions, increased 11% year-over-year to $985.3 million. Furthermore, Design IP sales jumped 53%, and Software Integrity revenues grew 8.1%.
Q2 and 2024 Outlook
Based on strong business momentum, Synopsys provided upbeat guidance for the second quarter of Fiscal Year 2024. It expects revenues to be in the range of $1.56 billion to $1.59 billion, compared with consensus estimates of $1.56 billion. Moreover, the company predicts that adjusted earnings will come in between $3.09 and $3.14 per share, above the Street’s expectations of $2.97 per share.
For the full Fiscal Year 2024, SNPS anticipates that revenue will fall between $6.57 billion and $6.63 billion, compared with the consensus of $6.62 billion. Also, adjusted EPS will remain in the range of $13.47 to $13.55, higher than the analysts’ expectations of $13.45 per share.
Is SNPS a Good Buy?
Synopsys stock has surged over 53% in the past year, buoyed by its strong presence in AI chip design solutions.
Wall Street analysts are optimistic about Synopsys stock. It has a Strong Buy consensus rating based on nine unanimous Buys. The average SNPS stock price target of $625 implies 15% upside potential.
