Synopsys (SNPS) AI Stock Analysis

• Market Cap: $74.39B
• Dividend Yield: N/A
• Average Volume (3M): 1.30M
• Price to Earnings (P/E): 34.2
• Beta (1Y): 1.55
• Revenue Growth: 0.30%
• EPS Growth: 50.17%
• Country: US
• Employees: 20,000
• Sector: Technology
• Sector Strength: 81
• Industry: Software - Infrastructure
• EPS (TTM): 3.67
• Shares Outstanding: 155,160,930
• 10 Day Avg. Volume: 1,210,785
• 30 Day Avg. Volume: 1,297,870
• PEG Ratio: 1.52
• Price to Book (P/B): 8.12
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 27.98
• Enterprise Value/Market Cap: 0.27
• Enterprise Value/Revenue: 0.80
• Enterprise Value/Gross Profit: 3.98
• Enterprise Value/Ebitda: 3.08
• 1Y Price Target: $598.58
• Price Target Upside: 26.38% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 12

• Rating: 77 Outperform
• Price Target: $568.00 ▲(19.93%Upside)

Synopsys' robust financial performance and strong earnings call insights are the primary strengths supporting its stock score. Challenges in China and valuation concerns slightly offset these positives. The technical indicators suggest a cautious outlook, while upcoming regulatory developments warrant attention.

Positive Factors

Financial Performance

SNPS reported strong 2Q results noting, a $400mn q/q increase to backlog and a cRPO increase of roughly $172mn.

Mergers and Acquisitions

If full restrictions apply, it could be beneficial for the closing of the ANSS deal, as it would remove key overhangs from SNPS' growth story.

Product Development

The new hardware, HAPS 200 prototyping systems, and ZeBu 200 systems are off to a strong start and are expected to drive a robust upgrade cycle with increasing supply availability as the year progresses.

Negative Factors

China Market Exposure

Concerns loom around whether BIS could ban any shipments to China, potentially putting 8-10% of SNPS FY25 sales at risk.

Earnings Guidance

The earnings guidance for Q3 is notably weaker than market expectations.

Geopolitical Risks

Reports suggest the Trump administration has asked leading EDA players to halt the shipment of tools to China, potentially putting a significant portion of Synopsys' future sales at risk.

Synopsys Business Overview & Revenue Model

Company Description

Synopsys, Inc. provides electronic design automation software products used to design and test integrated circuits. The company offers Fusion Design Platform that provides digital design implementation solutions; Verification Continuum Platform that provides virtual prototyping, static and formal verification, simulation, emulation, field programmable gate array (FPGA)-based prototyping, and debug solutions; and FPGA design products that are programmed to perform specific functions. It also provides intellectual property (IP) solutions for USB, PCI Express, DDR, Ethernet, SATA, MIPI, HDMI, and Bluetooth low energy applications; analog IP, including data converters and audio codecs; and system-on-chip (SoC) infrastructure IP, datapath and building block IP, and verification IP products, as well as mathematical and floating-point components, and Arm AMBA interconnect fabric and peripherals. In addition, the company offers logic libraries and embedded memories; configurable processor cores and application-specific instruction-set processor tools for embedded applications; IP subsystems for audio, sensor, and data fusion functionality; and security IP solutions. Further, it provides Platform Architect solutions for SoC architecture analysis and optimization; virtual prototyping solutions; and HAPS FPGA-based prototyping systems, as well as a series of tools used in the design of optical systems and photonic devices. Additionally, the company offers security testing, managed services, programs and professional services, and training that enable its customers to detect and remediate security vulnerabilities, and defects in the software development lifecycle, as well as manufacturing solutions. It serves electronics, financial services, automotive, medicine, energy, and industrial areas. The company was incorporated in 1986 and is headquartered in Mountain View, California.

How the Company Makes Money

Synopsys generates revenue through the sale of software licenses, maintenance and service agreements, and consulting services. The company's primary revenue stream comes from licensing its EDA software tools to semiconductor companies and electronics manufacturers. These licenses are typically subscription-based, providing a recurring revenue model. Additionally, Synopsys offers IP products that are licensed to customers for incorporation into their own chip designs. The company also earns money by providing professional services, which include training and consulting to help clients optimize their use of Synopsys' tools and technologies. Partnerships with leading semiconductor manufacturers and technology companies further bolster its revenue, as these collaborations often lead to joint development and innovation initiatives.

Synopsys Financial Statement Overview

Summary

Synopsys exhibits a strong financial foundation with robust profitability and efficient cash management. Despite minor fluctuations in operational margins, the company's consistent revenue growth and sound financial stability position it well within the industry.

Income Statement

Synopsys demonstrates a strong financial performance with robust gross and net profit margins, indicating efficient cost management and profitability. The company has shown consistent revenue growth, with a notable increase in net income over the years. However, there is a slight decrease in EBIT and EBITDA margins in the TTM, suggesting potential pressures on operating efficiency.

Balance Sheet

The balance sheet of Synopsys reflects a strong equity position with a favorable equity ratio. The debt-to-equity ratio remains manageable, indicating prudent leverage levels. Return on equity is impressive, showcasing the company's ability to generate returns for shareholders. The substantial increase in total assets and equity suggests robust financial growth.

Cash Flow

The company's cash flow statement highlights a healthy free cash flow generation, supporting operational and strategic initiatives. Although there is a decrease in operating cash flow in the TTM, the company maintains a strong free cash flow to net income ratio, indicating efficient cash conversion. The significant increase in financing cash flow in the TTM could suggest increased financial activities or investments.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
6.22B	6.13B	5.84B	5.08B	4.20B	3.69B
	Gross Profit
4.97B	4.88B	4.62B	4.02B	3.34B	2.89B
	EBIT
1.30B	1.36B	1.27B	1.16B	734.79M	620.14M
	EBITDA
1.50B	1.65B	1.65B	1.44B	1.10B	857.40M
	Net Income Common Stockholders
2.16B	2.26B	1.23B	984.59M	757.52M	664.35M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
14.26B	4.05B	1.59B	1.57B	1.58B	1.24B
	Total Assets
23.76B	13.07B	10.33B	9.42B	8.75B	8.03B
	Total Debt
10.74B	684.46M	687.80M	656.37M	666.77M	663.49M
	Net Debt
-3.38B	-3.21B	-751.11M	-761.24M	-766.07M	-572.16M
	Total Liabilities
13.84B	4.05B	4.15B	3.86B	3.45B	3.12B
	Stockholders Equity
9.92B	8.99B	6.15B	5.52B	5.30B	4.91B
Cash Flow		Free Cash Flow
1.09B	1.28B	1.51B	1.60B	1.40B	832.55M
	Operating Cash Flow
1.23B	1.41B	1.70B	1.74B	1.49B	991.31M
	Investing Cash Flow
1.44B	1.22B	-482.10M	-572.62M	-549.03M	-360.42M
	Financing Cash Flow
9.93B	-181.30M	-1.20B	-1.12B	-748.75M	-140.61M

Synopsys Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 473.62
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: 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 473.62 is below the 20-day moving average (MA) of 483.70, above the 50-day MA of 468.12, and below the 200-day MA of 492.27, indicating a neutral trend. The MACD of 1.12 indicates Positive momentum. The RSI at 45.67 is Neutral, neither overbought nor oversold. The STOCH value of 16.78 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SNPS.

Synopsys Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PANW	81 Outperform	$132.10B	115.62	21.16%	―	13.91%	-50.96%
FTNT	79 Outperform	$78.03B	42.35	205.91%	―	13.83%	58.13%
CRWD	78 Outperform	$119.49B	721.64	-5.76%	―	25.94%	-226.80%
SNPS	77 Outperform	$74.39B	34.24	15.82%	―	0.30%	50.17%
CYBR	73 Outperform	$19.58B	1,777.39	-5.36%	―	35.12%	-191.84%
ZS	72 Outperform	$47.49B	―	-2.68%	―	25.46%	49.20%
Sector *	62 Neutral	$11.92B	10.03	-7.37%	3.70%	7.32%	-8.25%

Synopsys Corporate Events

Synopsys Evaluates Impact of New Export Restrictions

On May 29, 2025, Synopsys announced it received a letter from the Bureau of Industry and Security of the U.S. Department of Commerce regarding new export restrictions related to China. The company is currently evaluating the potential impact of these restrictions on its business operations, financial results, and overall financial condition.

The most recent analyst rating on (SNPS) stock is a Buy with a $630.00 price target. To see the full list of analyst forecasts on Synopsys stock, see the SNPS Stock Forecast page.

Synopsys Stockholders Approve Equity Plan Amendments

On April 10, 2025, Synopsys, Inc. held its Annual Meeting of Stockholders, where stockholders approved amendments to the 2006 Employee Equity Incentive Plan and the Employee Stock Purchase Plan. These amendments include increasing the number of shares available for issuance and aligning the plans with current financial practices and policies. The meeting also resulted in the election of nine directors to the board and the ratification of KPMG LLP as the independent accounting firm for the fiscal year ending October 31, 2025. However, a proposal regarding shareholder ratification of golden parachutes was not approved.