Stock of the Day

May 25, 2021

Synopsys (SNPS)

$474.84
-$19.13 (-3.9%)
Market Cap: $76.36B

About Synopsys

Synopsys, Inc. provides electronic design automation software products used to design and test integrated circuits. It operates in three segments: Design Automation, Design IP, and Software Integrity. The company offers Digital and Custom IC Design solution that provides digital design implementation solutions; Verification solution that offers virtual prototyping, static and formal verification, simulation, emulation, field programmable gate array (FPGA)-based prototyping, and debug solutions; and FPGA design products that are programmed to perform specific functions. It also provides intellectual property (IP) solutions for USB, PCI Express, DDR, Ethernet, MIPI, HDMI, and Bluetooth low energy applications; logic libraries and embedded memories; processor cores, software, and application-specific instruction-set processor tools for embedded applications; security IP solutions; IP solutions for automotive market; and system-on-chip (SoC) infrastructure IP, datapath and building block IP, and verification IP products, as well as mathematical and floating-point components, and Arm AMBA interconnect fabric and peripherals. In addition, the company offers HAPS FPGA-based prototyping systems; virtual prototyping solutions; and Platform Architect solutions for SoC architecture analysis and optimization, as well as optical products, and mechatronic simulations. Further, it provides security and quality testing products, managed services, programs and professional services, and training that enable its customers to detect and remediate security vulnerabilities, and defects in the software development lifecycle, as well as manufacturing solutions. Additionally, the company provides intelligent orchestration solution, software risk manager, and black duck software composition analysis tools. It serves electronics, financial services, automotive, medicine, energy, and industrial areas. The company was incorporated in 1986 and is headquartered in Sunnyvale, California.

Synopsys Bull Case

Here are some ways that investors could benefit from investing in Synopsys, Inc.:

  • Synopsys, Inc. has received multiple "buy" ratings from analysts, indicating strong confidence in the company's future performance. This includes a recent price target of $675.00 from Loop Capital, suggesting potential for significant upside.
  • The company has a consensus target price of $641.82, which is substantially higher than the current stock price of $522.53. This indicates a potential for growth, making it an attractive investment opportunity.
  • Institutional investors own 85.47% of Synopsys, Inc.'s stock, which often reflects confidence in the company's stability and growth prospects. High institutional ownership can lead to more informed decision-making and stability in stock performance.
  • Recent reports indicate that Synopsys, Inc. operates in a growing sector of electronic design automation, which is critical for the development of integrated circuits. This positions the company well for future demand as technology continues to advance.
  • Analysts have noted a "Moderate Buy" consensus rating for Synopsys, Inc., with eleven analysts issuing buy ratings. This broad support from the analyst community can be a positive signal for potential investors.

Synopsys Bear Case

Investors should be bearish about investing in Synopsys, Inc. for these reasons:

  • The stock has recently traded down 1.1%, which may indicate short-term volatility and could be a concern for risk-averse investors.
  • Insider selling has been observed, with a significant sale by the Chief Revenue Officer, who sold over 20,000 shares. This could raise concerns about the executives' confidence in the company's future performance.
  • Despite the positive ratings, one analyst has issued a hold rating, suggesting that not all market participants are convinced of the stock's immediate upside potential.
  • The company has a relatively high PE ratio of 35.99, which may indicate that the stock is overvalued compared to its earnings. High valuations can lead to increased risk if the company fails to meet growth expectations.
  • Market fluctuations and economic uncertainties can impact the technology sector, including companies like Synopsys, Inc., which may lead to unpredictable stock performance.

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