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Investing.com - Wells Fargo has reduced its price target on Synopsys (NASDAQ:SNPS) to $445.00 from $550.00 while maintaining an Equal Weight rating on the stock. The software giant currently trades at $404.63, down nearly 38% from its 52-week high of $651.73.
The firm expects Synopsys to provide a conservative initial fiscal 2026 revenue and earnings guidance in line with current Street expectations of approximately $9.7 billion in revenue and $14 per share in earnings. This cautious outlook comes as InvestingPro data shows 16 analysts have recently revised their earnings expectations downward for the upcoming period.
Wells Fargo has maintained its fiscal 2025 estimates but lowered projections for fiscal years 2026 through 2028, with fiscal 2026 revenue now expected at $9.72 billion and earnings per share at $14.04. The company is set to report its next earnings on December 10, 2025.
The price target reduction reflects a valuation of 29 times price-to-earnings and 21 times enterprise value to EBITDA based on calendar 2026 estimates. Currently, Synopsys trades at a significantly higher P/E ratio of 54.28 and an EV/EBITDA of 66.89, suggesting the stock appears overvalued according to InvestingPro’s Fair Value assessment.
The firm believes Synopsys could potentially achieve low double-digit year-over-year revenue growth in fiscal 2026, but expects management to issue conservative guidance following the ANSS acquisition as the company needs to rebuild investor credibility. Despite recent stock performance challenges, Synopsys maintains impressive gross profit margins of 81.13%. For deeper insights into Synopsys’ financial health, valuation metrics, and comprehensive analysis, check out the InvestingPro Research Report, available for this and 1,400+ other US equities.
In other recent news, Synopsys, Inc. announced a restructuring plan that will result in the termination of approximately 10% of its workforce by the end of fiscal year 2025. This decision follows the company’s acquisition of ANSYS, Inc., and is expected to incur pre-tax charges between $300 million and $350 million. The company also reaffirmed its financial targets for the fourth quarter and full fiscal year 2025, with further details to be discussed in their upcoming earnings call. Additionally, Synopsys has appointed Mike Ellow as its new Chief Revenue Officer, succeeding Rick Mahoney, who recently departed from the position.
In collaboration with Microsoft and NVIDIA, Synopsys has introduced a new simulation-driven framework aimed at optimizing manufacturing processes in real time. The company also showcased its expanded engineering solutions portfolio, highlighting advancements in semiconductor design and physics simulation technologies at the NVIDIA GTC in Washington, D.C. These developments follow Synopsys’ recent combination with Ansys, enhancing their capabilities from silicon design to large-scale system simulations.
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