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Synopsys Inc SNPS

Rating as of

Morningstar’s Analysis

Valuation
Currency in USD
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

EDA and IP Advancements Drive Another Strong Quarter for Synopsys; Maintaining $233 FVE

Nupur Balain Equity Analyst

Analyst Note

| Nupur Balain |

Narrow-moat Synopsys reported strong first-quarter results as guidance targets were exceeded across the board and both revenue and non-GAAP earnings beat consensus expectations. This quarter, Synopsys was able to capitalize on secular trends towards AI and high-performance compute, with innovations in its core EDA space, IP portfolio, and software integrity segment driving broad-based success across all geographies. Synopsys continues to perform in line with our long-term expectations; as a result, we are maintaining our $233 fair value per share estimate. With shares trading at $280 after hours, we believe the company is currently trading at a premium and recommend waiting for a pullback before investing.

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Company Profile

Business Description

Synopsys was founded in December 1986 (called Optimal Solutions until 1987) and is a market leader in electronic design automation software. EDA is used to automate the design and verification of integrated circuits or larger chip systems. The firm provides an end-to-end workflow of EDA products. In addition, the firm offers a broad set of design intellectual property and leading software integrity tools that help customers develop secure, quality code. Historically, the firm’s tools have been relied upon by semiconductor firms, but there has been a shift toward other nontraditional "systems" users (nonsemiconductor firms interested in chip design) given the development of the Internet of Things, artificial intelligence, autonomous vehicles, and cloud computing.

Contact
690 East Middlefield Road
Mountain View, CA, 94043
T +1 650 584-5000
Sector Technology
Industry Software - Infrastructure
Most Recent Earnings Jan 31, 2021
Fiscal Year End Oct 31, 2021
Stock Type Aggressive Growth
Employees 15,036