Synopsys stock rating reiterated at Buy by Rosenblatt ahead of Q4 results

Investing.com - Rosenblatt has reiterated its Buy rating and $560.00 price target on Synopsys (NASDAQ:SNPS) ahead of the company’s fourth-quarter fiscal 2025 results, which are scheduled for release on December 10 after market close. Currently trading at $465.75, the stock is considered overvalued according to InvestingPro Fair Value metrics, despite its impressive 81.13% gross profit margins.

The firm expects Synopsys to report in-line results for the quarter ending October 31, following the company’s third-quarter miss and guidance cut that was primarily attributed to issues in its IP segment and the China market. Rosenblatt anticipates improvements in both areas over the next few quarters. Analysts maintain a consensus "Buy" recommendation with price targets ranging from $425 to $650, according to InvestingPro data.

Rosenblatt maintains its revenue estimate of $2,249 million for the quarter, representing approximately 37.5% year-over-year growth, which includes the first full quarter of Ansys revenue contribution. The firm expects ongoing supportive semiconductor and systems technology development trends, along with continued adoption of the Synopsys.ai product offering.

The research firm also notes that operating margins should reach 36% or higher, supported by the accelerated 10% reduction in force that was launched on November 9, which was originally planned to occur by the end of fiscal year 2026.

Synopsys stock has declined approximately 30% since the company’s third-quarter results were released on September 9, which factored into Rosenblatt’s decision to maintain its Buy rating as it expects further clarity on the IP business, China market recovery, and early traction with the Ansys business.

In other recent news, Synopsys has announced an expanded strategic partnership with NVIDIA, which includes a $2 billion investment by NVIDIA in Synopsys common stock. This partnership aims to integrate NVIDIA’s AI and accelerated computing capabilities with Synopsys’ engineering solutions. Additionally, Mizuho has reiterated its Outperform rating for Synopsys, maintaining a $600 price target following the partnership announcement. KeyBanc, however, adjusted its price target for Synopsys to $575, citing expected dilution from the NVIDIA investment, though it continues to rate the company as Overweight.

BofA Securities upgraded Synopsys’ stock rating from Underperform to Neutral, ahead of the company’s upcoming earnings call on December 10. This upgrade is seen as a potential opportunity to address concerns about weaknesses in Synopsys’ China and Intel IP business. Furthermore, the chairman of China’s international trade promotion body recently met with several semiconductor companies, including Synopsys, to discuss enhancing U.S.-China cooperation in the sector. These developments highlight significant strategic moves and analyst evaluations impacting Synopsys.

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