Company Overview - Synopsys is projected to report earnings of $3.26 per share for the upcoming earnings disclosure on August 21, 2024, indicating a year-over-year growth of 13.19% [8] - The Zacks Consensus Estimate for revenue is $1.53 billion, reflecting an increase of 2.55% from the previous year [8] - Currently, Synopsys has a Zacks Rank of 3 (Hold), with the consensus EPS estimate remaining unchanged over the last 30 days [5] Financial Performance - For the annual period, earnings are anticipated to be $13.03 per share and revenue at $6.19 billion, representing increases of +16.44% and +5.91% respectively compared to the last year [1] - The company's Forward P/E ratio is 45.1, which is a premium compared to the industry's average Forward P/E of 30.24 [10] Industry Context - The Computer - Software industry, which includes Synopsys, holds a Zacks Industry Rank of 158, placing it in the bottom 38% of over 250 industries [2] - The average PEG ratio for the Computer - Software industry is currently 2.47, while Synopsys has a PEG ratio of 2.81 [6] Market Performance - Over the past month, Synopsys shares have decreased by 1.32%, underperforming the Computer and Technology sector's gain of 0.47% and the S&P 500's gain of 1.96% [3] - In the latest trading session, Synopsys closed at $588.33, marking a slight increase of +0.11% from the previous day, outperforming the S&P 500, which fell by 0.16% [7]

SUNNYVALE, Calif., July 22, 2024 /PRNewswire/ -- Synopsys, Inc. (Nasdaq: SNPS) today announced it will report results for the third quarter fiscal year 2024 on Wednesday, August 21, 2024, after the market close. The company will host a conference call at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time to review its financial results and business outlook. Synopsys headquarters in Sunnyvale, Calif. (PRNewsfoto/Synopsys, Inc.)Synopsys headquarters in Sunnyvale, Calif. (PRNewsfoto/Synopsys, Inc.) Financial and ...

Core Insights - Synopsys' ARC HS4xFS Processor IP has received ISO/SAE 21434 grade certification, enhancing its credibility in the automotive sector [1][13] - The company is advancing its IP portfolio with significant developments, including the launch of a complete 1.6T Ethernet IP solution and collaborations with major players like TSMC [3][10] - The global semiconductor IP market is projected to grow at a CAGR of 8.5% from 2024 to 2032, indicating strong industry prospects [6] Company Developments - Synopsys has divested its Software Integrity Business to focus resources on core design automation and design IP segments [7] - The company reported a 15% year-over-year revenue increase to $1.45 billion in Q2 2024, reflecting strong demand for its products [16] - The ARC HS4xFS Processor IP is designed for embedded applications with a small footprint, complying with Automotive Safety Integrity Level D standards [5][13] Market Trends - The rising demand for advanced technology, including AI, 5G, IoT, and big data, is driving investments in new computing architectures [4] - The necessity for compliance with cybersecurity standards is increasing as more automotive brands adopt software-defined vehicles [9][20] - Competitors like Cadence Design Systems and Arm Holdings are also expanding their capabilities in the semiconductor IP market [10][14]

Core Insights - Synopsys ARC HS4xFS Processor IP has achieved ISO/SAE 21434 cybersecurity certification, addressing the need for enhanced security in automotive systems against cyber threats [1][8] - The certification ensures that Synopsys' IP development processes are compliant with stringent automotive regulatory requirements, facilitating the protection of connected vehicles from cyberattacks [8][9] - The ARC HS4xFS Processors are also certified to ISO 26262, ensuring compliance for safety-critical systems, thus providing both cybersecurity and safety certifications [8][10] Company Commitment - Synopsys emphasizes the importance of cybersecurity in the automotive industry, showcasing its commitment to delivering high-quality and safe IP products that help customers meet regulatory requirements [4][14] - The company plans to continue investing in certifying its broad IP portfolio to ensure compliance with cybersecurity requirements, thereby reducing design risk and accelerating time-to-market for systems-on-chips [8][14] Industry Context - The automotive industry is facing increasing cybersecurity regulations due to the rise in hardware and software vulnerabilities in connected vehicles, necessitating compliance with standards like ISO/SAE 21434 [9][14] - Automotive OEMs are mandated by the UN R155 regulation to adopt a cybersecurity management system, making compliance essential for market success [9][14]

Core Viewpoint - Synopsys is expected to report strong earnings and revenue growth in the upcoming earnings release, with positive analyst sentiment reflected in the estimates [2][3][4]. Company Performance - Synopsys closed at $616.01, with a daily gain of +0.32%, outperforming the S&P 500's gain of 0.28% [1]. - Over the past month, Synopsys shares appreciated by 4.04%, underperforming the Computer and Technology sector's gain of 4.22% but outperforming the S&P 500's gain of 3.78% [1]. Earnings Forecast - The forecasted EPS for Synopsys is $3.26, representing a 13.19% increase from the same quarter last year [2]. - Revenue is expected to be $1.53 billion, showing a 2.55% increase compared to the year-ago quarter [2]. - For the entire fiscal year, earnings are projected at $13.03 per share and revenue at $6.19 billion, reflecting increases of +16.44% and +5.91% respectively from the prior year [3]. Analyst Estimates - Changes in analyst estimates are crucial as they reflect short-term business trends, with upward revisions indicating positive sentiment towards the company's operations [4]. - The Zacks Rank system, which assesses these estimate changes, currently ranks Synopsys at 3 (Hold) [6]. Valuation Metrics - Synopsys has a Forward P/E ratio of 47.12, which is higher than the industry average of 30.81, indicating it is trading at a premium [7]. - The PEG ratio for Synopsys is currently 2.94, compared to the industry average PEG ratio of 2.49 [8]. Industry Context - The Computer - Software industry, which includes Synopsys, has a Zacks Industry Rank of 102, placing it in the top 41% of all industries [9].

Core Insights - The article discusses the importance of performing due diligence before making any financial decisions, emphasizing that the information provided is for educational and research purposes only [2]. Group 1 - The content includes general news, personal analysis, and opinions intended for educational purposes [2]. - It highlights that the information is not a recommendation or advice for any financial actions [2]. - The website may include advertisements and promotional content, and FX Empire may receive compensation from third parties [2].

Core Viewpoint - The article discusses the differences between the Average Brokerage Recommendation (ABR) and the Zacks Rank, emphasizing the importance of understanding these metrics when evaluating Synopsys as an investment opportunity. Group 1: Brokerage Recommendations - Synopsys has an average brokerage recommendation (ABR) of 1.20, indicating a consensus between Strong Buy and Buy, with 86.7% of recommendations being Strong Buy and 6.7% being Buy [6] - Despite the positive ABR, caution is advised as relying solely on this metric may not lead to successful investment decisions, as studies show brokerage recommendations often lack predictive power for stock price appreciation [7][12] - Analysts from brokerage firms tend to exhibit a strong positive bias in their ratings, often misaligning with retail investors' interests [8][12] Group 2: Zacks Rank - The Zacks Rank for Synopsys is currently 3 (Hold), reflecting steady views on the company's earnings prospects, which have remained unchanged at a consensus estimate of $13.03 [3][16] - The Zacks Rank is based on earnings estimate revisions, which are timely indicators of future price movements, contrasting with the potentially outdated nature of the ABR [13][15] - Empirical research indicates a strong correlation between earnings estimate revisions and near-term stock price movements, making the Zacks Rank a more reliable tool for investors [15]

Company Overview - Synopsys, a software maker for chip testing and development, has seen its shares increase by 6.82% over the past month, underperforming the Computer and Technology sector's gain of 8.61% but outperforming the S&P 500's gain of 4.34% during the same period [2] - The company's current stock price is $607.94, reflecting a decrease of 1.23% from the previous day [7] Financial Performance - For the fiscal year, Zacks Consensus Estimates predict earnings of $13.03 per share and revenue of $6.19 billion, representing increases of 16.44% and 5.91% respectively from the previous year [3] - The upcoming earnings report is projected to show an EPS of $3.26, indicating a 13.19% increase year-over-year, with quarterly revenue expected to reach $1.53 billion, up 2.55% from the same quarter last year [8] Valuation Metrics - Synopsys is currently trading at a Forward P/E ratio of 47.23, which is a premium compared to the industry average Forward P/E of 30.58 [5] - The company has a PEG ratio of 2.94, higher than the industry average PEG ratio of 2.56 [11] Industry Context - The Computer - Software industry, which includes Synopsys, has a Zacks Industry Rank of 155, placing it in the bottom 39% of over 250 industries [6] - The strength of individual industry groups is measured by the Zacks Industry Rank, with top-rated industries outperforming the bottom half by a factor of 2 to 1 [12] Analyst Sentiment - Recent changes to analyst estimates for Synopsys indicate a positive outlook for the company's business trends, with no changes in the Zacks Consensus EPS estimate over the past month [9][10] - Synopsys currently holds a Zacks Rank of 3 (Hold), reflecting a neutral sentiment among analysts [10]

Core Insights - Synopsys is expanding its presence in the artificial intelligence (AI) sector through partnerships with major companies like Intel, AMD, and Microsoft, which is positively impacting its revenue growth [1][4][10] - The company launched a new multi-die reference flow that enhances the design process and is expected to strengthen its position in chip manufacturing [2][8][11] - Synopsys has introduced several AI-focused products and applications in 2024, including Synopsys ZeBu EP2 and Polaris Assist, to support AI architecture [9][10] Company Developments - In late 2023, Synopsys launched Synopsys.ai Copilot in collaboration with Microsoft, integrating Azure OpenAI Service to enhance its AI capabilities [4] - The new multi-die reference flow is designed to reduce fabrication time and improve system performance, which is crucial for the adoption by Intel [2][8] - Synopsys has seen a 15.7% increase in its shares year-to-date, outperforming the Zacks Computer-Software industry's growth of 15% [6] Market Trends - The AI market is projected to grow at a compound annual growth rate (CAGR) of 28.46% from 2024 to 2030, indicating significant opportunities for Synopsys to expand its product offerings [12] - The integration of Synopsys' products with Intel Foundry's platforms aims to minimize integration risks and reduce time-to-market for new technologies [11] Competitive Landscape - Despite advancements, Synopsys faces stiff competition in the AI space, which could impact its growth prospects [13] - The company also experiences concentration risk due to reliance on a limited number of clients that contribute significantly to its revenue [14]

Core Viewpoint - Wall Street analysts' recommendations significantly influence stock prices, but their reliability is questionable due to potential biases stemming from brokerage firms' vested interests [1][4][13]. Summary by Sections Brokerage Recommendations - Synopsys has an average brokerage recommendation (ABR) of 1.19, indicating a consensus between Strong Buy and Buy, with 14 out of 16 recommendations classified as Strong Buy [1][2]. - Strong Buy and Buy recommendations account for 87.5% and 6.3% of all recommendations, respectively [2]. Analyst Bias and Reliability - Analysts from brokerage firms tend to exhibit a strong positive bias in their ratings, issuing five Strong Buy recommendations for every Strong Sell [4]. - This bias may mislead investors, as brokerage recommendations often do not accurately reflect a stock's potential price movement [5][8][14]. Zacks Rank vs. ABR - The Zacks Rank, a proprietary stock rating tool, is based on earnings estimate revisions and is considered a more reliable indicator of near-term price performance compared to ABR [6][10]. - The Zacks Rank is displayed in whole numbers (1 to 5), while ABR is typically shown in decimals [9]. - The Zacks Consensus Estimate for Synopsys remains unchanged at $13.03, indicating stability in earnings expectations [11][16]. Investment Considerations - Despite a Buy-equivalent ABR for Synopsys, caution is advised due to the unchanged earnings estimate and the potential for analysts' overly optimistic ratings [12][16]. - The Zacks Rank for Synopsys is currently 3 (Hold), suggesting that the stock may perform in line with the broader market in the near term [16].