Synopsys
SNPS
$443.37
+2.04%
Synopsys is a leading provider of electronic design automation (EDA) software and semiconductor intellectual property (IP), enabling chip designers to create complex integrated circuits. As a dominant player in the EDA industry, Synopsys holds a strong competitive position, benefiting from the convergence of semiconductor and systems companies investing in in-house chip design. The current investor narrative centers on Synopsys' growth trajectory, driven by secular trends in AI and digitalization, but recent stock weakness following its Q2 earnings beat and the completion of its Processor IP sale to GlobalFoundries has created a debate about valuation and organic growth sustainability.…
SNPS
Synopsys
$443.37
Related headlines
SNPS 12-Month Price Forecast
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Synopsys's 12-month outlook, with a consensus price target around $576.38 and implied upside of +30.0% versus the current price.
Average Target
$576.38
7 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
7
covering this stock
Price Range
$355 - $576
Analyst target range
Synopsys is covered by 7 analysts, with a consensus leaning bullish. The distribution includes 4 Buy/Overweight ratings, 2 Hold/Neutral, and 1 Sell (implied from downgrades). The average target price is not explicitly provided, but based on the estimated EPS of $23.32 and a forward P/E of 25.33x, the implied target is approximately $590. This suggests an upside of about 35% from the current price of $437.16. The consensus recommendation is Overweight, indicating positive sentiment. The target range is wide: the low estimate of $22.73 EPS implies a target of ~$575, while the high of $23.72 EPS implies ~$600. This tight range (within 4%) suggests high conviction among analysts. Recent ratings show a mix: Morgan Stanley downgraded from Overweight to Equal Weight in February 2026, while Rosenblatt maintained Buy. The wide spread between the current price and analyst targets indicates that the market is pricing in more risk than analysts, possibly due to integration challenges or macro headwinds. The limited coverage (7 analysts) is typical for a large-cap stock, but the high conviction is notable.
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SNPS Technical Analysis
Synopsys is in a sustained downtrend, with the stock down 16.43% over the past year, significantly underperforming the S&P 500's 19.1% gain. The current price of $437.16 sits at 67% of its 52-week range (low $376.18, high $651.73), indicating the stock is closer to its lows than highs, suggesting a value opportunity but also reflecting persistent selling pressure. The 1-year price change of -16.43% contrasts sharply with the broader market, highlighting stock-specific weakness. Short-term momentum is mixed: the 1-month change is -14.00%, while the 3-month change is +10.41%, showing a recent bounce from March lows. The 1-month decline of -14.00% conflicts with the 3-month gain, suggesting the stock may be experiencing a temporary pullback within a broader recovery attempt. The relative strength versus the S&P 500 is deeply negative at -12.75% over 1 month and -35.53% over 1 year, confirming persistent underperformance. Key support is at the 52-week low of $376.18, a break below which could signal further downside toward $350. Resistance is at the 52-week high of $651.73, and a breakout above that level would indicate a trend reversal. With a beta of 1.222, Synopsys is 22% more volatile than the market, meaning larger swings in both directions, which is important for risk management.
Beta
1.22
1.22x market volatility
Max Drawdown
-41.0%
Largest decline past year
52-Week Range
$376-$652
Price range past year
Annual Return
-19.5%
Cumulative gain past year
| Period | SNPS Return | S&P 500 |
|---|---|---|
| 1m | -4.7% | +2.0% |
| 3m | +13.0% | +10.6% |
| 6m | -15.6% | +8.3% |
| 1y | -19.5% | +20.4% |
| ytd | -7.7% | +10.2% |
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SNPS Fundamental Analysis
Revenue growth has been robust but decelerating. In the most recent quarter (Q1 FY2026, ended January 31, 2026), revenue was $2.409 billion, up 65.5% year-over-year, driven by the Ansys acquisition. However, organic growth appears weaker, as highlighted by recent analyst commentary. The multi-quarter trend shows revenue accelerating from $1.455 billion in Q1 FY2025 to $2.409 billion in Q1 FY2026, but the acquisition masks organic trends. License and maintenance revenue of $951.5 million and technology services of $715.7 million indicate a diversified revenue base. Profitability metrics are mixed. Net income in Q1 FY2026 was $64.7 million, a sharp decline from $295.7 million in the year-ago quarter, resulting in a net margin of just 2.7% versus 20.3% a year ago. Gross margin remained strong at 73.5%, but operating margin compressed to 8.4% from 17.3%, reflecting higher costs from the Ansys integration. The company is still profitable, but margins have contracted significantly. The balance sheet is healthy. Debt-to-equity is 0.50, and the current ratio is 1.62, indicating adequate liquidity. Free cash flow (TTM) is $2.279 billion, providing ample cash for operations and investments. ROE is 4.7%, and ROA is 1.5%, reflecting lower profitability in the recent quarter. The company generates strong cash flow, with operating cash flow of $856.8 million in Q1 FY2026, supporting internal growth.
Quarterly Revenue
$2.4B
2026-01
Revenue YoY Growth
+65.52%
YoY Comparison
Gross Margin
73.54%
Latest Quarter
Free Cash Flow
$2.3B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is SNPS Overvalued?
Since net income is positive ($64.7 million), the primary valuation metric is the P/E ratio. The trailing P/E is 55.82x, while the forward P/E is 25.33x, implying the market expects significant earnings growth. The gap between trailing and forward P/E suggests that earnings are expected to rebound sharply, likely from the Ansys acquisition synergies. Compared to the software industry average P/E of approximately 30x, Synopsys' trailing P/E of 55.82x represents an 86% premium, but the forward P/E of 25.33x is at a 16% discount, indicating that the market is pricing in a normalization of earnings. Historically, Synopsys' trailing P/E has ranged from 17.7x (Q4 FY2024) to 287.8x (Q1 FY2026), with the current 55.82x near the lower end of its recent range, suggesting the stock is not excessively overvalued relative to its own history. The P/S ratio of 10.30x is above the industry average of 8x, reflecting a premium for its market position.
PE
55.8x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 18x~288x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
33.6x
Enterprise Value Multiple
