Synopsys(US:SNPS) SINOLINK SECURITIES·2024-06-18 02:31Investment Rating - The report assigns a "Buy" rating with a target price of $707.78 per share, reflecting an 18x price-to-sales (P/S) valuation for the fiscal year 2024 [56][117]. Core Insights - The company is the global leader in the EDA (Electronic Design Automation) industry and the second-largest supplier of IP (Intellectual Property) [53][67]. - The EDA market is projected to grow at a compound annual growth rate (CAGR) of 12% from 2023 to 2028, with AI developments potentially increasing this growth rate to 14% [4][14]. - The company has a strong recurring revenue model, with over 80% of its total revenue coming from recurring sources [95][96]. - The company is focusing on enhancing its EDA business and has announced the sale of its Software Integrity business for $2.1 billion, expected to close in the second half of 2024 [21][78]. - The acquisition of Ansys for approximately $35 billion is anticipated to enhance the company's capabilities in physical simulation and system-level design, with completion expected in the first half of 2025 [21][26]. Summary by Sections Market Position and Growth - The company has maintained a leading market share of approximately 35.2% in the EDA sector and 21.9% in the IP sector as of fiscal year 2023 [94][95]. - The EDA industry is characterized by high concentration, with major players like Intel, TSMC, and ASML collaborating with the company on advanced technologies [4][8]. Financial Performance - For fiscal year 2023, the company reported revenues of $5.84 billion, a 15% increase year-over-year, and a net profit of $1.23 billion, reflecting a 24.9% growth [67][122]. - The company expects revenue growth of 5.0% in fiscal year 2024, with projected revenues of $6.14 billion, and further growth of 13.7% and 14.4% in fiscal years 2025 and 2026, respectively [116][122]. Product and Technology Development - The company has been integrating AI into its EDA tools, launching several AI-driven solutions that enhance design efficiency and reduce time-to-market [14][100]. - The introduction of Multi-Die design solutions is expected to significantly impact the EDA market, with projections indicating that by 2027, a substantial percentage of chips will adopt this technology [101][102]. Strategic Initiatives - The company has a history of strategic acquisitions, with over 113 acquisitions since 1994, aimed at expanding its product offerings and market reach [78][79]. - The focus on AI and Multi-Die technologies is expected to open new avenues for growth in the EDA business, aligning with industry trends towards more complex chip designs [14][101].