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Investing.com - Stifel raised its price target on Synopsys (NASDAQ:SNPS) to $650 from $550 on Monday, maintaining a Buy rating on the electronic design automation company. The new target sits within the current analyst range of $550-$715 for the company, which commands a market capitalization of $113 billion and trades near $610. According to InvestingPro analysis, the stock appears to be trading above its Fair Value.
The research firm expects Synopsys to deliver better-than-expected fiscal third-quarter results, with guidance midpoints either in line with or exceeding consensus estimates for revenue, margins, and earnings per share. The company’s impressive gross profit margin of 81% and strong financial health score from InvestingPro support this optimistic outlook. InvestingPro subscribers have access to 14 additional key insights about Synopsys’s financial performance.
Stifel noted that the recent $35 billion acquisition of Ansys (NASDAQ:ANSS) is likely to become accretive sooner than anticipated, with integration already underway and synergy benefits expected to materialize in the first half of 2026.
The firm believes sell-side earnings estimates have bottomed out following several overhangs including "Liberation Day," China export restrictions, and Ansys acquisition approval concerns, setting the stage for potential upward revisions.
While China remains a headwind for Synopsys, Stifel highlighted that the company’s diversified geographic exposure helps mitigate regional risks, and the return to its five-year average multiple signals strong investor confidence.
In other recent news, Synopsys has completed its acquisition of Ansys, expanding its engineering solutions and creating a leader in the field from silicon to systems. This merger, first announced in January, combines Synopsys’ silicon design expertise with Ansys’ simulation capabilities, targeting a $31 billion total addressable market. Synopsys is set to report its third-quarter earnings on September 9, which will include the first combined financials with Ansys. Ahead of this report, KeyBanc has raised its price target for Synopsys to $660, maintaining an Overweight rating. Similarly, Piper Sandler increased its price target to $660, citing the merger’s potential to create a $10 billion run-rate entity. Goldman Sachs reiterated its Buy rating with a $700 target, noting potential volatility due to the Ansys integration. Additionally, Synopsys announced expanded AI capabilities through its Synopsys.ai Copilot, significantly improving productivity in semiconductor design. These developments mark significant strides for Synopsys as it continues to grow its capabilities and market reach.
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