Synopsys Shares at $460 Look Attractive Ahead of December 8 Report
Synopsys shares hover near $460 ahead of the December 8 financial report; earnings estimates are rising, but investors are more focused on the company’s 2027 fiscal year outlook.
In the third quarter, Synopsys reported revenue of $2.48 billion, an increase of 42.4% year over year. Adjusted earnings per share amounted to $3.91, compared to the consensus forecast of $3.67. The company has exceeded analysts' expectations for the fourth consecutive quarter, after which management raised the annual adjusted earnings per share target to $15.07.
Synopsys holds a leading position in the market for chip design and verification software, as well as licensing intellectual property for chips. The acquisition of Ansys expanded its operations in simulation—from silicon to finished systems. Management expects the Multiphysics Fusion product to support growth in the EDA segment in the 2027 fiscal year.
The optimistic scenario is linked to rising earnings estimates and a relatively low forward multiple. However, the company faces significant debt load, amortization of intangible assets, and weak GAAP net income. The financial report also mentions shareholder lawsuits over the disclosure of Design IP information, a warning from Morgan Stanley about slowing growth, and risks related to export restrictions involving China.
The fourth-quarter earnings forecast was close to market expectations, so investors will primarily focus on Synopsys’ guidance for the 2027 fiscal year. The market will assess the growth rate of EDA, the dynamics of Design IP, and early revenues from new projects. Analysts’ average target price is above the current share price, but the author emphasizes that these are only estimates and do not guarantee stock growth.
