Synopsys (SNPS) shares have shown some movement over the past month and are currently trading at $404.63. With annual revenue and net income growth both around 16% to 19%, investors may be evaluating the stock’s underlying value.
After a difficult few months, Synopsys shares have rebounded impressively in the past week, gaining real momentum with a 3.7% increase. The 1-month share price return stands at -12.8% and the total shareholder return over 12 months remains down 28%. Long-term holders still see a 5-year total return of nearly 78%, showing the company's enduring strength even through recent volatility.
If Synopsys' recent movement got your attention, it might be the perfect time to explore leading names in tech and AI through our discovery list: See the full list for free.
With the numbers in mind, the key question is whether Synopsys is trading at a bargain given its growth rates or if the market has already factored in its future prospects. Is this a chance to buy in, or is everything already priced in?
Advertisement
Most Popular Narrative: 27.3% Undervalued
Compared to its last closing price of $404.63, the most widely followed narrative sees Synopsys as having a fair value much higher. This suggests the market may be missing some crucial upside potential and provides an opportunity to explore what drives that outlook.
The ongoing transformation towards SaaS/cloud-based EDA and Ansys product integration is expected to increase customer stickiness and shift more revenues to subscription and service models. This improves revenue visibility and earnings consistency, directly addressing operational headwinds and is likely underappreciated if the stock is undervalued.
Want to know what bold assumptions unlock this much higher fair value? It is not just growth, but a combination of shifting business models and ambitious profitability targets that could push Synopsys well beyond current expectations. Explore the projections that underpin this surprisingly bullish valuation.
While many see Synopsys as undervalued, its price-to-earnings ratio stands at 64.4x, making it much more expensive than the US Software industry average of 30.4x and also above its estimated fair ratio of 45.2x. This notable gap raises important questions about valuation risk for buyers right now. Which side of the argument do you agree with?
If you are not convinced by this perspective or want to dig into the numbers yourself, you can craft a personalized Synopsys story in just a few minutes. Do it your way.
Tap into powerful growth and automation trends by searching for promising opportunities among these 26 AI penny stocks that are making waves in the industry.
This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.
New: Manage All Your Stock Portfolios in One Place
We've created the ultimate portfolio companion for stock investors, and it's free.
• Connect an unlimited number of Portfolios and see your total in one currency • Be alerted to new Warning Signs or Risks via email or mobile • Track the Fair Value of your stocks
