Synopsys is the IBD Stock Of The Day as the chip design software maker climbs amid strong demand for its tools. SNPS stock is approaching a buy point.
Synopsys shares have been on an upswing since the Mountain View, Calif.-based company reported better-than-expected results for its fiscal second quarter. In its May 18 report, Synopsys also raised its outlook for the current quarter and full fiscal year.
On the stock market today, SNPS stock dipped a fraction to close at 337.67.
SNPS stock has formed a double-bottom base with a buy point of 342.69, according to IBD analysis. However, it has been hitting resistance near that buy point for the last two days.
The double-bottom base is within a larger consolidation period. IBD MarketSmith charts show SNPS stock in a 29-week consolidation pattern with a buy point of 377.70. That buy point is 10 cents above the stock's all-time high of 377.60, based on IBD trading guidelines.
SNPS Stock On Three IBD Lists
Meanwhile, its relative strength line has been climbing as Synopsys outperforms the S&P 500 index.
Synopsys is on the IBD 50 and Long-Term Leaders stock lists along with industry peer Cadence Design Systems. Also, SNPS stock is on the IBD Big Cap 20 stock list.
Synopsys makes software for designing semiconductors. It also has a growing business in tools for assuring quality and security in software applications. It has benefited from the growing complexity of semiconductors as well as secular trends such as artificial intelligence, high-performance computing and custom chip designs.
Synopsys Ranks First In Group
In a note to clients on July 18, BofA Securities analyst Vivek Arya said he expects Synopsys and its peers to give an in-line or better outlook for the calendar third quarter. However, he has a neutral rating on SNPS stock with a price target of 360.
SNPS stock ranks first out of 12 stocks in IBD's Computer Software-Design industry group, according to IBD Stock Checkup. The stock has an IBD Composite Rating of 98 out of 99. The Composite Rating scores a stock's key growth metrics against all other stocks regardless of industry group.
The design software industry group ranks No. 61 out of 197 industry groups that IBD tracks. Choosing highly rated stocks from leading industry groups in a confirmed stock market uptrend generally increases your chances of making profits in growth stocks.
The next major catalyst for Synopsys stock is likely to be the company's next earnings report, likely to occur in mid- to late August.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
