Analysts Expect Positive Earnings for Synopsys Ahead of Q2 Reports

Valued at over $60 billion by market cap, Synopsys, Inc. (SNPS), based in Sunnyvale, California, specializes in comprehensive silicon-to-systems design solutions. These range from electronic design automation to silicon IP and system verification and validation.

Upcoming Financial Announcements

The company is set to release its second-quarter results on Wednesday, May 28. Analysts anticipate that SNPS will report an adjusted EPS of $2.40, reflecting a 12.2% increase compared to the $2.14 EPS reported during the same quarter last year. Furthermore, Synopsys has exceeded analyst expectations for earnings in each of the last four quarters.

Fiscal Projections

For the full fiscal year 2025, SNPS is expected to deliver an adjusted EPS of $10.70, which is a 4.4% rise from the $10.25 reported in fiscal 2024. Looking ahead to fiscal 2026, earnings are forecasted to increase by 19.8% year-over-year to $12.82 per share.

Stock Performance

SNPS stock has declined 18.3% over the past 52 weeks, significantly underperforming the S&P 500 Index, which recorded 8.4% gains, and the Technology Select Sector SPDR Fund, which saw an increase of 4.2% during the same period.

Recent Financial Challenges

Despite reporting better-than-expected financials, Synopsys’ stock prices fell 3.4% in the trading session following the release of its Q1 results on February 26. Although total revenues reached $1.46 billion, exceeding forecasts, they represented a 3.7% decline compared to the previous year. The decline was attributed to a soft macroeconomic environment, which resulted in a 17.2% drop in the Design IP segment’s revenues, totaling $435.1 million.

Furthermore, Synopsys faced a significant rise in general and administrative costs, contributing to a sharper decrease in earnings. Net income for the quarter fell 34.2% year-over-year to $295.7 million. The company also reported a negative cash flow of $67.5 million from operations and lowered its full-year GAAP-based earnings guidance, impacting investor confidence.

Market Sentiment

Despite the headwinds, the consensus outlook for SNPS remains positive, holding a “Strong Buy” rating overall. Among the 18 analysts covering the stock, there are 15 “Strong Buys,” one “Moderate Buy,” and two “Holds.” The average price target of $601.44 indicates a potential upside of 35.5% from current levels.

On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.