Stock of the Day

May 25, 2021

Synopsys (SNPS)

$490.16
+$7.96 (+1.7%)
Market Cap: $76.05B

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.:

  • The company recently reported earnings per share (EPS) of $3.67, exceeding analysts' expectations, which indicates strong financial performance and potential for growth.
  • With a net margin of over 36%, Synopsys, Inc. demonstrates efficient management of expenses relative to its revenue, suggesting robust profitability.
  • The current stock price is around $444, reflecting a solid valuation in the semiconductor sector, which is experiencing growth due to increasing demand for electronic design automation.
  • Analysts forecast an EPS of 10.64 for the current fiscal year, indicating expected growth in earnings, which can attract more investors looking for upward trends.
  • Insider ownership is relatively low at 0.62%, which may suggest that the stock is not overly influenced by insider trading, potentially providing a more stable investment environment.

Synopsys Bear Case

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

  • Recent insider selling, including a significant transaction where an insider sold over 15,000 shares, may raise concerns about the company's future prospects from those within the organization.
  • Despite strong earnings, the stock has seen fluctuations, with some analysts reducing their price targets, which could indicate uncertainty in the market.
  • With a return on equity of 20.48%, while strong, it may not be as competitive compared to other companies in the semiconductor industry, suggesting potential limitations in growth.
  • Market analysts have mixed ratings, with some maintaining a "hold" rating, which could signal caution for potential investors regarding the stock's future performance.
  • 85.47% of the stock is owned by institutional investors, which can lead to volatility if these large stakeholders decide to sell their positions, impacting stock price stability.
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