HSBC Downgrades Synopsys Citing Transition Year and Limited Near-Term Catalysts

Core Viewpoint - HSBC downgraded Synopsys from Buy to Hold, setting a price target of $455 due to anticipated challenges in fiscal 2026 driven by geopolitical uncertainty and Intel's foundry operations affecting the Electronic Design Automation (EDA) business [1] Group 1: Financial Performance and Projections - Fiscal 2026 is expected to be a transitional year for Synopsys, influenced by external factors that may impact revenue [1] - The EDA segment represented over 60% of total revenue in fiscal 2025, highlighting its significance to the company's financial health [1] Group 2: Growth Outlook - Growth in the Design IP segment is expected to be muted compared to the company's long-term mid-teens growth outlook as management shifts focus towards artificial intelligence opportunities [2] - The lack of clear near-term catalysts contributed to the decision to lower the rating to Hold [2]