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Sunnyvale, California-based Synopsys, Inc. (SNPS) is a leader in electronic design automation (EDA) software, semiconductor intellectual property (IP), and silicon-to-systems solutions. Valued at a market cap of $76.1 billion, the company’s tools enable engineers to create complex integrated circuits and system-on-chips for applications spanning AI, automotive, cloud computing, mobile, and high-performance computing.
Companies valued at $10 billion or more are typically classified as “large-cap stocks,” and SNPS fits the label perfectly, with its market cap exceeding this threshold, underscoring its size, influence, and dominance within the software - infrastructure industry. With growing demand for smaller, faster, and more energy-efficient chips, the company benefits from long-term structural tailwinds in the semiconductor industry, supported by deep customer relationships, a subscription-based business model, and continued investment in R&D.
Despite its notable strength, this tech company has slipped 37.1% from its 52-week high of $651.73, reached on Jul. 30. Shares of Synopsys have declined 31.1% over the past three months, considerably underperforming the Technology Select Sector SPDR Fund’s (XLK) 7.9% rise during the same time frame.
In the longer term, SNPS has fallen 26% over the past 52 weeks, notably lagging behind XLK's 20.9% uptick over the same time period. Moreover, on a YTD basis, shares of SNPS are down 15.6%, compared to XLK’s 22.1% return.
To confirm its bearish trend, SNPS has been trading below its 200-day and 50-day moving averages since early September.
On Sep. 9, SNPS reported weaker-than-expected Q3 results, leading to a 35.8% fall in its share price in the following trading session. The company’s total revenue improved 14% year-over-year to $1.7 billion, but missed analyst expectations by 1.7%. Meanwhile, its adjusted EPS of $3.39 declined 1.2% from the year-ago quarter and fell 11.7% short of Wall Street estimates.
SNPS has also notably underperformed its rival, Cadence Design Systems, Inc.’s (CDNS) 1.2% drop over the past 52 weeks and 2% rise on a YTD basis
Despite Synopsys’ recent underperformance, analysts remain moderately optimistic about its prospects. The stock has a consensus rating of "Moderate Buy” from the 21 analysts covering it, and the mean price target of $552.14 suggests a 34.8% premium to its current price levels.
