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Investing.com - Stifel has reduced its price target on Synopsys (NASDAQ:SNPS) to $550.00 from $650.00 while maintaining a Buy rating on the stock following the company’s third-quarter earnings miss. Currently trading at $604.37, the stock maintains strong momentum with a 40.6% return over the past six months. According to InvestingPro analysis, the company’s current valuation metrics suggest the stock is trading near its Fair Value.
Synopsys reported fiscal third-quarter revenue of $1.74 billion, below the consensus estimate of $1.77 billion. The company’s adjusted operating margin came in at 38.5% versus an expected 39.5%, while adjusted earnings per share reached $3.39, missing the $3.80 consensus. Despite the miss, InvestingPro data shows the company maintains impressive gross profit margins of 81.13% and strong financial health scores. Get access to 16+ additional ProTips and comprehensive analysis with an InvestingPro subscription.
The underperformance was primarily attributed to weakness in the Design IP segment, which Stifel noted was affected by cautious behavior from Chinese customers following Bureau of Industry and Security restrictions and the absence of expected Intel-related opportunities that had been anticipated for the second half of fiscal 2025.
Stifel indicated that management expects IP performance to remain subdued into fiscal 2026, citing limited visibility into Intel’s roadmap and an ongoing strategic reorganization of Synopsys’ IP segment. Despite these challenges, the firm believes the company’s Core EDA business is tracking as planned.
While Stifel reduced its adjusted earnings per share estimates based on lower operating margin assumptions, the firm remains positive on Synopsys’ long-term outlook, noting that the company’s IP segment could eventually return to 15-20% growth, though this is now viewed as a multi-year development. With a current market capitalization of $111.8 billion and analyst price targets ranging from $535 to $715, investors can access detailed valuation analysis and growth projections through InvestingPro’s comprehensive research reports, available for over 1,400 US stocks.
In other recent news, Synopsys Inc . reported its financial results for the third quarter of 2025, which showed earnings per share of $3.39, missing analyst expectations of $3.80. The company’s revenue for the quarter was $1.74 billion, falling short of the projected $1.77 billion. In a related development, Mizuho has maintained an Outperform rating for Synopsys, despite a mixed performance in the third quarter, particularly noting strong growth in the design automation segment, which increased by 23% year-over-year. Wolfe Research has adjusted its price target for Synopsys, lowering it to $540 from $700, while still maintaining an Outperform rating. This adjustment reflects Synopsys’ performance, which has not kept pace with its design software peers or broader market indices. Baird, on the other hand, downgraded Synopsys from Outperform to Neutral due to concerns over the company’s Design IP outlook, particularly in light of challenges related to China restrictions and customer behavior. These recent developments highlight varying analyst perspectives on Synopsys’ current market position and future prospects.
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