Update shared on17 Sep 2025
Fair value Decreased 13%Analysts have lowered Synopsys’ price target from $652.74 to $569.19 due to continued weakness and structural uncertainty in the IP segment—driven by China-related demand softness and muted foundry opportunities—despite optimism around the Ansys acquisition and stable performance in the company’s remaining businesses.
Analyst Commentary
- Weakness in the IP segment, driven by cautious Chinese customer behavior post-BIS restrictions, delayed design starts, and shaken confidence has led to multi-quarter revenue pressure; questions remain whether the IP challenges are structural or temporary.
- Reduced visibility and uncertain outlook regarding Intel-related opportunities, with major foundry customers pivoting technology, are expected to result in muted IP performance into FY26 and a related strategic reorganization within the IP segment.
- Resource reallocation and potential 10% reduction in force (RIF) by FY26 within the IP business are underway as the company seeks to align with broader industry growth and accelerate profitability despite near-term headwinds.
- The close and regulatory approval of the $35B Ansys acquisition are viewed positively, supporting product synergies, particularly as advanced semiconductor design trends (multi-die, thermally limited designs) accelerate; Ansys brings favorable simulation market exposure.
- Partial bullishness has been renewed due to the lifting of China export restrictions and the confidence that the rest of the business outside of IP is tracking in line with expectations for FY26 performance.
What's in the News
- China’s market regulator has conditionally approved Synopsys’ acquisition of Ansys, requiring fair, non-discriminatory EDA product supply to Chinese customers in light of eased U.S. export restrictions (Reuters, 2025-07-14).
- Synopsys issued Q4 2025 revenue guidance of $2,230M–$2,260M with a projected GAAP loss per share of $0.27–$0.16, and full-year guidance of $7,030M–$7,060M in revenue and GAAP EPS of $5.03–$5.16; no shares were repurchased during the recent buyback tranche (Key Developments, 2025-09-09).
- Synopsys expanded Synopsys.ai Copilot GenAI capabilities for semiconductor design, boosting productivity and enabling faster chip development, while integrating Ansys’ simulation AI tools; an AgentEngineer technology prototype was also demonstrated (Key Developments, 2025-09-03).
- Strategic partnerships were announced with GlobalFoundries (launching a global chip design-to-tapeout education program) and participation in the JOINT3 consortium for panel-level organic interposer development, alongside collaborations with Tata Elxsi and SiMa.ai for advanced automotive virtualization and AI chiplet technologies (Key Developments, 2025-07 to 2025-09).
- Synopsys was added to multiple Russell Value Indexes in June 2025, including the Russell 1000 Value, 3000 Value, and Top 200 Value indexes (Key Developments, 2025-06).
Valuation Changes
Summary of Valuation Changes for Synopsys
- The Consensus Analyst Price Target has significantly fallen from $652.74 to $569.19.
- The Future P/E for Synopsys has significantly risen from 59.29x to 92.41x.
- The Net Profit Margin for Synopsys has significantly fallen from 22.25% to 15.20%.
Disclaimer
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