Synopsys (SNPS)
NASDAQ:SNPS
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Synopsys
(NASDAQ:SNPS)
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Rating:66Neutral
Price Target:
$411.00
▲(3.51% Upside)
Action:ReiteratedDate:03/03/26
The score is driven primarily by strong cash generation and solid underlying financial performance, reinforced by a constructive earnings update (EPS guidance raised, strong backlog and free cash flow, and Ansys integration momentum). These positives are tempered by weak technical trend signals and a high valuation multiple, which increase downside sensitivity if margins or integration execution weaken.
Positive Factors
Strong free cash flow generation
Sustained, material free cash flow growth and FCF close to reported earnings indicate high earnings quality and recurring cash conversion from software/IP licensing. This durable cash engine supports debt reduction, R&D, buybacks and strategic M&A over multiple years, bolstering financial flexibility.
Negative Factors
Elevated absolute debt balance
A sizable absolute debt load reduces balance-sheet optionality and increases sensitivity to interest costs or slower cash flow. Even with strong FCF, elevated leverage constrains capital allocation priorities and raises execution risk for large integration investments or opportunistic M&A during adverse cycles.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong free cash flow generation
Sustained, material free cash flow growth and FCF close to reported earnings indicate high earnings quality and recurring cash conversion from software/IP licensing. This durable cash engine supports debt reduction, R&D, buybacks and strategic M&A over multiple years, bolstering financial flexibility.
Read all positive factors
Synopsys (SNPS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$76.22B
Dividend YieldN/A
Average Volume (3M)2.21M
Price to Earnings (P/E)287.8
Beta (1Y)1.52
Revenue Growth12.62%
EPS Growth-45.12%
CountryUS
Employees28,000
SectorTechnology
Sector Strength88
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)3.77
Shares Outstanding191,562,030
10 Day Avg. Volume2,098,170
30 Day Avg. Volume2,214,478
Financial Highlights & Ratios
PEG Ratio-1.21
Price to Book (P/B)2.57
Price to Sales (P/S)10.30
P/FCF Ratio53.88
Enterprise Value/Market Cap1.10
Enterprise Value/Revenue10.51
Enterprise Value/Gross Profit13.98
Enterprise Value/Ebitda31.87
Forecast
1Y Price Target
$535.00Price Target Upside34.74% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering13
EPS Forecast (FY)14.46
Revenue Forecast (FY)$9.63B
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 th...
How the Company Makes Money
Synopsys primarily makes money by selling (1) software tools and (2) semiconductor IP, with additional revenue from (3) services and (4) software integrity/security offerings.
1) EDA software licensing and related maintenance/support
- Synopsys s...
Synopsys Key Performance Indicators (KPIs)
Any
Revenue by Type
Breaks down revenue streams, highlighting which product or service types contribute most to the company’s top line and potential areas for growth.
Breaks down revenue streams, highlighting which product or service types contribute most to the company’s top line and potential areas for growth.
Data provided by:
The Fly
The FlySynopsys Earnings Call Summary
Earnings Call Date:Feb 25, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:May 20, 2026
Earnings Call Sentiment Positive
The call emphasized a strong start to FY'26 with revenue at the high end of guidance, a material non-GAAP EPS beat, high non-GAAP margins, robust free cash flow and sizeable backlog. Integration of Ansys is already contributing meaningful revenue and is expected to drive cross-sell and joint-solution monetization over time, while the company is pursuing $400M run-rate revenue synergies and accelerating cost synergies. On the downside, Design IP is in a transitional phase with a ~6% YoY revenue decline, depressed IP margins and some timing/delivery risk for new IP titles. China headwinds and softer consumer/auto/industrial design starts add regional and end-market pressure. Overall, the positive operational execution, strong cash generation, and Acceleration from Ansys integration outweigh the near-term IP and China-related challenges.Positive Updates
Top-Line Beat and Strong Quarter Start
Q1 total revenue of $2.41 billion came in at the high end of guidance, driven in part by approximately $886 million of Ansys revenue; company reiterated full-year revenue guidance of $9.56B–$9.66B.
Negative Updates
Design IP Revenue Decline and Transitional Year
Design IP revenue was $407 million, down approximately 6% year-over-year and flat sequentially; management reiterated FY'26 will be a transitional year for IP with muted growth expected.
Read all updates
Q1-2026 Updates
Positive
Negative
Top-Line Beat and Strong Quarter Start
Q1 total revenue of $2.41 billion came in at the high end of guidance, driven in part by approximately $886 million of Ansys revenue; company reiterated full-year revenue guidance of $9.56B–$9.66B.
Read all positive updates
Company Guidance
Synopsys reiterated full‑year targets while raising non‑GAAP EPS and provided detailed Q1/Q2 metrics: Q1 revenue was $2.41B (Ansys ~$886M), backlog $11.3B, total cash & short‑term investments $2.2B, total debt $10B (term loans of $4.3B repaid), GAAP EPS $0.34 and non‑GAAP EPS $3.77, non‑GAAP operating margin 42.1% (Q1 non‑GAAP costs $1.4B), free cash flow ~$822M; by segment Design Automation revenue was ~$2.0B with a 47.3% adjusted operating margin and Design IP was $407M (‑6% y/y) with a 16.2% margin. Full‑year guidance: revenue $9.56B–$9.66B (Ansys ~$2.9B at midpoint, growing double digits), GAAP costs $8.46B–$8.60B, non‑GAAP costs $5.69B–$5.75B (non‑GAAP operating margin ~40.5% at midpoint), GAAP EPS $2.21–$2.62, non‑GAAP EPS $14.38–$14.46 (up $0.06), operating cash flow ~$2.2B, CapEx ~$300M, and free cash flow ~$1.9B; Q2 targets: revenue $2.225B–$2.275B, GAAP costs $2.02B–$2.085B, non‑GAAP costs $1.38B–$1.41B, GAAP EPS $0.23–$0.43 and non‑GAAP EPS $3.11–$3.17, and the Board authorized up to $2B in share repurchases.Synopsys Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
62
Positive
Cash Flow
84
Very Positive
| Breakdown | TTM | Oct 2025 | Oct 2024 | Oct 2023 | Oct 2022 | Oct 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 8.01B | 7.05B | 6.13B | 5.32B | 4.62B | 4.20B |
| Gross Profit | 6.02B | 5.43B | 4.88B | 4.29B | 3.72B | 3.34B |
| EBITDA | 2.64B | 2.50B | 1.85B | 1.56B | 1.33B | 1.01B |
| Net Income | 1.10B | 1.33B | 2.26B | 1.23B | 984.59M | 757.52M |
Balance Sheet | ||||||
| Total Assets | 47.24B | 48.22B | 13.07B | 10.33B | 9.42B | 8.75B |
| Cash, Cash Equivalents and Short-Term Investments | 2.20B | 2.96B | 4.05B | 1.59B | 1.57B | 1.58B |
| Total Debt | 10.04B | 14.29B | 684.46M | 677.60M | 656.37M | 666.77M |
| Total Liabilities | 16.69B | 19.90B | 4.05B | 4.15B | 3.86B | 3.45B |
| Stockholders Equity | 30.55B | 28.33B | 8.99B | 6.15B | 5.52B | 5.30B |
Cash Flow | ||||||
| Free Cash Flow | 2.28B | 1.35B | 1.28B | 1.51B | 1.60B | 1.40B |
| Operating Cash Flow | 2.44B | 1.52B | 1.41B | 1.70B | 1.74B | 1.49B |
| Investing Cash Flow | -15.90B | -15.91B | 1.22B | -482.10M | -572.62M | -549.03M |
| Financing Cash Flow | 11.80B | 13.39B | -181.30M | -1.20B | -1.12B | -748.75M |
Synopsys Technical Analysis
Negative
397.07
Price Trends
432.11
Negative
445.61
Negative
486.34
Negative
Market Momentum
-11.87
Positive
40.38
Neutral
29.81
Neutral
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 397.07 is below the 20-day moving average (MA) of 413.83, below the 50-day MA of 432.11, and below the 200-day MA of 486.34, indicating a bearish trend. The MACD of -11.87 indicates Positive momentum. The RSI at 40.38 is Neutral, neither overbought nor oversold. The STOCH value of 29.81 is Neutral, 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $97.06B | 14.24 | 62.31% | ― | 10.53% | 34.24% | |
74 Outperform | $138.61B | 71.18 | 15.49% | ― | 15.30% | -60.71% | |
72 Outperform | $61.95B | 31.84 | 123.64% | ― | 14.78% | 22.52% | |
66 Neutral | $22.85B | -232.70 | -3.48% | ― | 23.24% | -8.83% | |
66 Neutral | $76.22B | 287.80 | 4.57% | ― | 12.62% | -45.12% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
57 Neutral | $411.76B | 27.89 | 57.35% | 1.00% | 11.08% | 29.56% |
* Technology Sector Average
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Synopsys Corporate Events
Business Operations and StrategyStock Buyback
Synopsys Launches $250 Million Accelerated Share Repurchase
Positive
Mar 2, 2026
On March 2, 2026, Synopsys announced it had entered into a $250 million accelerated share repurchase agreement with The Bank of Nova Scotia to buy back its common stock. The move underlines the company’s capital return strategy and could sig...
Business Operations and StrategyStock BuybackFinancial Disclosures
Synopsys Posts Strong Q1 Results, Expands Buyback Program
Positive
Feb 25, 2026
On Feb. 25, 2026, Synopsys reported first-quarter fiscal 2026 revenue of $2.409 billion, up from $1.455 billion a year earlier, with GAAP EPS of $0.34 and non-GAAP EPS of $3.77, both at or above guidance. Management highlighted strong execution, a...
Business Operations and StrategyExecutive/Board Changes
Synopsys Updates Board as Part of Governance Refresh
Positive
Feb 19, 2026
On February 14, 2026, Synopsys’ board expanded from eleven to twelve members and appointed former Deloitte executive Peter A. Shimer as an independent director and audit committee member, effective immediately. Shimer, an audit committee fin...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.