On Wednesday, Rosenblatt reiterated its Buy rating on Synopsys (NASDAQ:SNPS), with a price target of $635.00. This aligns with the broader analyst sentiment, as InvestingPro data shows 9 analysts have recently revised their earnings estimates upward for the upcoming period. With a current market capitalization of $87.6 billion, Synopsys maintains its position as a prominent player in the software industry. The firm expects Synopsys to deliver fourth quarter and full-year fiscal 2024 results that align with or slightly surpass projections.
The results, due after market close on December 4, 2024, are anticipated following stable performances from competitors in the Electronic Design Automation (EDA) space, including Ansys (NASDAQ:ANSS), which reported strong third-quarter numbers.
Synopsys' fourth-quarter revenue is estimated at $1,650 million by Rosenblatt, marking an approximate 3.2% year-over-year increase, and a 12.5% rise discounting the impact of the Software (ETR:SOWGn) Integrity Group (SIG (LON:SHI)) unit sale. The company has demonstrated strong financial performance, with InvestingPro reporting impressive gross profit margins of 80.5% and substantial revenue growth of 26.26% over the last twelve months.
According to InvestingPro's Fair Value analysis, the stock currently appears to be trading above its intrinsic value. This estimate falls within Synopsys' own guidance range of $1,614 million to $1,644 million. The analyst anticipates that ongoing semiconductor and systems technology development trends, along with the robust performance of the Synopsys.ai product, will continue to support the company's growth.
The sale of the Software Integrity Group to private equity, which was finalized on October 1, 2024, brought in $1.5 billion at closing. This divestiture is seen as a strategic move for Synopsys, allowing it to focus on core operations and growth areas.
Moreover, Synopsys' pending acquisition of Ansys is on track, with expectations for the deal to be finalized in the first half of 2025. InvestingPro analysis reveals the company's strong financial position to support this acquisition, with a healthy current ratio of 2.02 and moderate debt levels.
For a deeper understanding of Synopsys' financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, covering over 1,400 top US stocks. The transaction is currently under review by the UK's Competition and Markets Authority (CMA). Despite these significant corporate developments, Rosenblatt's price target and Buy rating remain unchanged, reflecting confidence in the company's market position and future prospects.
In other recent news, Synopsys has been the focus of several analyst firms. Baird reaffirmed an Outperform rating on Synopsys, projecting a growth rate of 12-13% for fiscal year 2025, which is expected to climb to approximately 15% year-over-year. Loop Capital initiated coverage with a Buy rating, citing the company's potential to capitalize on the increasing trend of captive chip designs and the rapid growth of China's chip design activity.
Needham maintained its Buy rating, adjusting its FY25 forecast with stronger growth expected in the second half. Mizuho (NYSE:MFG) initiated coverage with an Outperform rating, citing the company's potential growth, especially following its acquisition of Ansys. Berenberg initiated coverage with a Buy rating, highlighting Synopsys's differentiated product offerings in high-growth markets.
Synopsys has displayed solid financial performance with a 13% increase in revenue and a 27% growth in non-GAAP earnings per share in Q3 2024, surpassing its targets. The company's full-year guidance for 2024 anticipates revenue between $6.105 billion and $6.135 billion, and non-GAAP EPS ranging from $13.07 to $13.12.
In addition to these financial highlights, Synopsys also finalized the sale of its Software Integrity business to entities controlled by investment groups Clearlake Capital Group and Francisco Partners. The company also announced a collaboration with Taiwan Semiconductor Manufacturing Company to deliver advanced Electronic Design Automation and Intellectual Property solutions.
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