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Synopsys Inc SNPS

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Narrow-moat Synopsys’ Results Buoyed by Secular Tailwinds; Raising FVE to $242

Nupur Balain Equity Analyst

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.

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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 Apr 30, 2021
Fiscal Year End Oct 31, 2021
Stock Type Aggressive Growth
Employees 15,036

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