This article first appeared on GuruFocus.
Sep 10 Synopsys (NASDAQ:SNPS) fell more than 20% on early Wednesday trading as investors reacted to weaker-than-expected third-quarter results and guidance. The chip design software firm reported fiscal Q3 adjusted earnings that came in below Wall Street estimates, along with a cautious forecast for the rest of the year.
For the upcoming fiscal fourth quarter, Synopsys expects adjusted EPS between $2.76 and $2.80 on revenue of $2.23 billion to $2.26 billion. That outlook trails analyst expectations of $4.50 EPS and $2.10 billion in revenue.
For the full year, management projects adjusted EPS of $12.76 to $12.80 and revenue of $7.03 billion to $7.06 billion, while consensus had called for $15.13 in EPS and $6.74 billion in revenue.
Chief Financial Officer Shelagh Glaser said the company has taken a more conservative view for Q4 while still planning for another year of profitable growth. She pointed to ongoing weakness in Design IP demand as a key factor in the outlook.
The results underscore the challenges software providers face as chipmakers and customers navigate a slower spending environment. Investors will watch closely to see how Synopsys balances growth initiatives with tighter customer budgets through year-end.
Based on the one year price targets offered by 20 analysts, the average target price for Synopsys Inc is $636.03 with a high estimate of $715.00 and a low estimate of $535.00. The average target implies a upside of +5.24% from the current price of $604.37.
Based on GuruFocus estimates, the estimated GF Value for Synopsys Inc in one year is $701.23, suggesting a upside of +16.03% from the current price of $604.37. Gf value is Gurufocus’ estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business’ performance. For deeper insights, visit the forecast page.
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