Key Stats for Synopsys Stock
- Price change for Synopsys stock in the last 6 months: 6%
- $SNPS Stock Price as of Sep. 25: $426
- 52-Week High: $539
- $SNPS Stock Price Target: $554
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What Happened?
Synopsys (SNPS) stock moved higher last week after HSBC upgraded it from Hold to Buy.
HSBC also raised its price target to $700 from $490. The firm called it a street-high target. From today’s price of around $426, that’s about 65% upside.
The math is simple. HSBC expects Synopsys to earn $20.01 per share in fiscal 2027. That’s 13% above the Wall Street average and the highest estimate.
HSBC then applied a 35-times earnings multiple to get to $700.
HSBC pointed to two main growth drivers.
The first is royalties. Synopsys sells chip design building blocks, called IP. It has usually charged a one-time license fee. Now it’s moving toward licensing plus royalties for custom chips.
CEO Sassine Ghazi calls this “Factory 2.” Big tech companies building their own AI chips need Synopsys’ technology, and royalties could bring in steady income over time.
The second is agentic AI. These are AI agents that handle chip design work on their own.
Synopsys says it has more than 30 active customer projects. When agents do more of the work, they run Synopsys’ design software far more often. That could mean more revenue.
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What the Market Is Telling Us About Synopsys Stock
The upgrade builds on a strong quarter. In Q3, revenue jumped 42% to $2.48 billion, helped by the Ansys acquisition. Adjusted EPS came in at $3.91, beating estimates of $3.67.
The core business is picking up, too. Chip design software revenue grew 8.5%, and Synopsys expects double-digit growth in Q4 and for the full year. The IP business grew 11% after a rough stretch.
Synopsys also raised its full-year outlook. It now expects revenue of $9.69 billion to $9.74 billion. It lifted its free cash flow forecast by $600 million to about $2.6 billion.
HSBC isn’t alone. Baird and Morgan Stanley both recently upgraded Synopsys stock, and Benchmark kept its Buy rating.
Valuation is the main risk. Synopsys stock trades at 75 times earnings, which is expensive. InvestingPro data suggests the stock looks overvalued compared to its fair value.
The next big test is Synopsys’ Investor Day. Management plans to share more on royalties and AI pricing. If those plans look solid, Synopsys stock could have more room to run.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
