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Investing.com - Wolfe Research has lowered its price target on Synopsys (NASDAQ:SNPS) to $540.00 from $700.00 while maintaining an Outperform rating on the semiconductor design software company. With a market capitalization of $112 billion and impressive gross profit margins of 81%, Synopsys remains a prominent player in the software industry, according to InvestingPro data.
The firm’s adjustment comes as Synopsys shares have gained just 1% year-to-date (including after-hours movement), underperforming its design software peers by 9 percentage points, compared to the S&P 500’s 11% rise and the iShares Expanded Tech-Software ETF’s (IGV) 12% increase.
Synopsys currently trades at 32 times its projected calendar year 2026 price-to-earnings ratio, which is in line with other design software peers, according to Wolfe Research’s analysis.
The new $540 price target implies approximately 35 times the calendar year 2026 estimated P/E, representing a 25% discount to Wolfe’s valuation of Cadence Design Systems, consistent with its discount prior to the recent earnings report.
Wolfe Research has reduced its fiscal year 2026, 2027, and 2028 revenue estimates for Synopsys by 8%, 9%, and 10% respectively, while cutting earnings per share estimates by 16%, 17%, and 16% for the same periods.
In other recent news, Synopsys Inc . reported its financial results for the third quarter of 2025, revealing earnings per share of $3.39, which missed analyst expectations of $3.80. The company’s revenue for the quarter was $1.74 billion, falling short of the projected $1.77 billion. These earnings and revenue results are crucial for investors as they indicate a shortfall in performance compared to forecasts. Additionally, Baird downgraded Synopsys from Outperform to Neutral, citing concerns about the company’s Design IP outlook. The downgrade was influenced by challenges related to China restrictions and customer behavior. Baird also adjusted its price target for Synopsys from $670.00 to $535.00. These recent developments highlight the challenges Synopsys is facing in its current market environment.
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