Synopsys (SNPS) Stock Forecast & Price Target

Synopsys's financial outlook appears promising, driven by a projected revenue growth of approximately 36.6% in FY26, expected to reach $9.637 billion, along with a continued positive growth trajectory into FY27 at around 10.7%. The integration of Ansys is also contributing positively, with anticipated double-digit growth in FY26, supported by demand in sectors like aerospace, which is expected to further enhance overall revenue. Furthermore, the broader EDA market is poised for acceleration, with expectations of a mid-teens CAGR due in part to advancements in generative AI, positioning Synopsys for improved operating margins and recovery in its IP business over the medium term.

The analysis indicates a negative outlook on Synopsys's stock due to a significant year-over-year decline in IP revenue, which fell by 21% to $407 million, signaling potential challenges within this key segment. Furthermore, concerns arose regarding the slower-than-expected growth rates within the EDA market, particularly as future projections suggest a modest compound annual growth rate (CAGR) of high single digits, driven by uncertainties in China and a repositioning of IP offerings. Lastly, the company's forecast for FY26 reflects subdued expectations, with anticipated EDA growth around 8%, which is below historical levels and indicative of underlying weaknesses within Synopsys's operational performance and market positioning.