Integration Of Ansys And AI Trends Will Drive Engineering Excellence

Synopsys’ analyst price target has decreased from $569.19 to $556.40, as analysts cite ongoing headwinds in the company’s Design IP segment and muted near-term growth prospects. This is despite some optimism over longer-term recovery and strategic initiatives.

Analyst Commentary

Recent street research on Synopsys reflects a divided sentiment among analysts, as ongoing challenges in the Design IP segment are counterbalanced by strategic moves and acquisition-led growth opportunities. The following highlights summarize the prevailing bullish and bearish takeaways from the latest analyst reports.

• Bullish analysts cite Synopsys' continued business strength outside of the Design IP segment, noting that the core operations are tracking in line with expectations for fiscal 2026.
• The acquisition of Ansys is viewed as a major strategic positive, promising operational synergies, especially in advanced semiconductor design and multi-die packaging. This positions the company for long-term value creation.
• Following the completion of regulatory approvals for the Ansys deal, Synopsys is set to expand its reach in the simulation space and gain exposure to a broader semiconductor market.
• Rescission of China export restrictions has improved sentiment, with renewed conviction among analysts for sustained growth and improved investor confidence moving forward.

• Bearish analysts express concern over sustained headwinds in the Design IP business. This segment experienced a weak quarter due to cautious customer behavior following export restrictions and changes in major foundry customer technology direction.
• Visibility into a recovery for the Design IP segment remains limited, with management now anticipating muted contributions from this unit well into fiscal 2026.
• Ongoing export-related challenges and shaken customer confidence in key regions have led to delays and reduced demand. This may pressure the stock and growth outlook in the near to medium term.
• Major resource reallocations within IP are expected to take multiple quarters, signaling lower growth from this business until strategic realignment is complete.

What's in the News

• China's market regulator conditionally approved Synopsys' acquisition of Ansys, requiring fair and ongoing support for Chinese customers in line with existing contracts (Reuters).
• Synopsys unveiled a digital twin racetrack experience powered by Discovery and NVIDIA Omniverse at the Aramco STEM Racing World Finals, giving global student teams access to advanced simulation tools (Key Developments).
• Close collaboration with TSMC continues as Synopsys delivers certified EDA and IP products for advanced process nodes, including integration of Ansys solutions and expanded design enablement for AI, photonics, and next-generation chip technologies (Key Developments).
• Synopsys expanded GenAI capabilities with Synopsys.ai Copilot for semiconductor design. This aims to accelerate development cycles and boost engineering productivity for industry and academic customers (Key Developments).
• New earnings guidance was provided. Synopsys projects Q4 revenue between $2,230 million and $2,260 million, and fiscal 2025 revenue from $7,030 million to $7,060 million, alongside updated EPS expectations (Key Developments).

Valuation Changes

• Consensus Analyst Price Target has decreased modestly, moving from $569.19 to $556.40.
• Discount Rate edged down slightly, from 9.00% to 8.97%.
• Revenue Growth estimate has declined, falling from 22.79% to 21.47%.
• Net Profit Margin has improved, increasing from 15.20% to 15.75%.
• Future P/E ratio declined, moving from 92.41x to 89.94x.