Analyst Note| Nupur Balain |
Narrow-moat Synopsys reported impressive second-quarter results that exceeded both our and management's expectations. We are raising our fair value estimate for Synopsys to $242 from $233 on the back of stronger-than-expected performance and acceleration in industry trends that should drive healthy long-term growth, and view shares as fairly valued at the moment. Synopsys continues to capitalize on secular trends in the semiconductor space, including increased investments in AI, high-performance compute, and Internet of Things, with innovations in EDA, IP, and software integrity supporting broad-based success across all geographies. The firm's Fusion Compiler and Continuum Platform are also seeing healthy demand as real-time unified solutions in the semiconductor design process are becoming increasingly important as chip complexity grows. We expect industry tailwinds and strong products to lead to healthy long-term growth for Synopsys.