Analysts have reduced their price targets for Synopsys by a range of $20 to $110 per share. They cite persistent headwinds in the IP business, temporary impacts from China export restrictions, and uncertainties around major customer partnerships as key factors influencing the updated outlook.
Analyst Commentary
Analysts provided a mix of cautious and positive perspectives following Synopsys’ recent quarterly results and business updates. After scrutinizing the impact of recent headwinds in its IP business and broader industry shifts, analysis centered on both near-term risks and long-term opportunities for the company.
Bullish Takeaways- Bullish analysts raised Synopsys' valuation outlook in response to the strategic benefits anticipated from the recent Ansys acquisition. They cited new product synergies and positioning in advanced semiconductor design as key growth drivers.
- Despite current headwinds, there is optimism that challenges related to China export restrictions and Intel exposure are transient, with potential for recovery and growth beyond fiscal year 2026.
- Core business segments outside of IP are viewed as stable and likely to deliver performance that aligns with previous expectations, supporting longer-term targets.
- Resource reallocation and operational adjustments in the IP segment are expected to better align Synopsys with industry opportunities. This could potentially accelerate profitability goals in coming years.
- Bearish analysts note continued softness in IP revenues, driven partly by persistent uncertainty with major foundry customers and ongoing China-related demand challenges.
- A lack of near-term visibility into key customer roadmaps, especially with Intel, has pressured growth expectations through at least fiscal year 2026.
- There are concerns that recent delays and shifting customer strategies could translate to multi-quarter impacts, resulting in muted growth in the IP business for the foreseeable future.
- Weaker confidence among Chinese customers and resource adjustments tied to evolving technology needs are expected to weigh on execution and valuation in the near term.
What's in the News
- Synopsys unveiled a digital twin racetrack experience for over 400,000 students as part of its exclusive global CFD simulation partnership for STEM Racing. This initiative leverages NVIDIA Omniverse libraries and provides advanced simulation tools for the Aramco STEM Racing World Finals in Singapore (Key Developments).
- The company announced expanded collaboration with TSMC, including certification of Ansys simulation and analysis solutions for TSMC's most advanced process nodes. The collaboration also focuses on further development of AI-assisted design flows to accelerate chip innovation in AI, high-speed communications, and advanced computing (Key Developments).
- Synopsys introduced new Synopsys.ai Copilot generative AI capabilities for semiconductor design, aiming to accelerate development timelines and improve engineering productivity. Significant workflow efficiency gains have been demonstrated for customers, and integration with Ansys simulation tools further advances GenAI-driven engineering (Key Developments).
- The company launched a strategic chip design-to-tapeout education program with GlobalFoundries, providing hands-on access to chip design and manufacturing for universities worldwide. This program supports next-generation workforce development in semiconductor engineering (Key Developments).
- Synopsys collaborated with Resonac and 26 global semiconductor supply chain leaders to develop materials and tools for panel-level organic interposers. This initiative advances next-generation semiconductor packaging and production methods (Key Developments).
Valuation Changes
- Fair Value Estimate remains unchanged at $556.40 per share, reflecting a stable long-term outlook despite recent headwinds.
- Discount Rate has risen slightly from 8.97% to 8.98%, indicating a minor increase in perceived risk.
- Revenue Growth projections are virtually unchanged, holding steady at approximately 21.47%.
- Net Profit Margin outlook has increased marginally, from 15.75% to 15.77%, suggesting a modest improvement in profitability expectations.
- Future P/E Ratio has decreased slightly from 89.94x to 89.85x, signaling minor adjustments in earnings multiples applied to projected results.
Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.