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Synopsys Inc SNPS

Rating as of

Morningstar’s Analysis

Valuation
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Synopsys Executes on Heightened Industry Demand; CFO Announces Retirement; Raising FVE to $285

Abhinav Davuluri, CFA Sector Strategist

Analyst Note

| Abhinav Davuluri, CFA |

Narrow-moat Synopsys reported solid fourth-quarter results, with revenue falling short of our bullish expectations but in line with management and FactSet consensus expectations, and adjusted EPS exceeding our above-consensus expectation. The company also announced the retirement of CFO Trac Pham, who will stay with the company until a successor has been appointed. Synopsys finished its fiscal year exceeding all financial goals as the company continues to benefit from increasing demand in the semiconductor space as levels of investment in AI, high-performance compute, and Internet of Things secularly increase. We expect Synopsys’ solutions to gain broad-based relevance as chip-centric electronic systems proliferate throughout essentially all industries. As a result, we are raising our fair value estimate to $285 from $242 per share, which also includes the effects of our annual model roll and a stronger long-term growth outlook from management.

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