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Investing.com - Piper Sandler reduced its price target on Synopsys (NASDAQ:SNPS) to $630.00 from $660.00 on Wednesday, while maintaining an Overweight rating on the semiconductor design software company. With a current market capitalization of $112 billion and trading at a P/E ratio of 69x, InvestingPro data indicates the stock is trading above its Fair Value.
The price target adjustment follows Synopsys’ third-quarter 2025 results, which revealed multiple headwinds affecting the company’s intellectual property (IP) business that could impact performance for several quarters.
Piper Sandler identified three specific challenges: China export restrictions that delayed design starts and dampened customer confidence even after restrictions were lifted; a large foundry customer pivoting its technology, rendering previously developed IP blocks ineffective for the second half of 2025; and Synopsys’ internal reallocation of IP resources to better align with industry growth opportunities.
The firm noted that while these issues will likely pressure Synopsys shares in the near term, the company has potential levers to improve profitability, including a planned 10% reduction in workforce by fiscal year 2026.
Despite the lowered price target, Piper Sandler maintained its Overweight rating, suggesting the firm remains positive on Synopsys’ long-term prospects despite the current headwinds in its IP business. InvestingPro subscribers can access 16 additional ProTips and a comprehensive analysis of Synopsys in the Pro Research Report, offering deeper insights into the company’s valuation and growth prospects.
In other recent news, Synopsys reported fiscal third-quarter revenue of $1.74 billion, which fell short of the consensus estimate of $1.77 billion. The company’s adjusted earnings per share were $3.39, missing the expected $3.80. Analysts from KeyBanc, Needham, Rosenblatt, and Stifel have all lowered their price targets for Synopsys, citing weaker-than-expected performance in the company’s intellectual property (IP) business. KeyBanc adjusted its price target to $590, Needham to $550, Rosenblatt to $605, and Stifel also to $550. Despite these challenges, Mizuho maintained an Outperform rating with a $700 price target, highlighting strong growth in Synopsys’s design automation segment. The company completed its acquisition of Ansys in mid-July, which contributed $78 million to its total revenues. Analysts have expressed mixed sentiments, with some maintaining positive ratings while others downgraded their outlooks due to the IP segment’s underperformance.
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