Piper Sandler Starts Synopsys (SNPS) at Overweight, 'Transformative Moves Create New Margin Opportunity'

(Updated - April 4, 2024 4:51 AM EDT)

Piper Sandler analyst Clarke Jeffries initiates coverage on Synopsys (NASDAQ: SNPS) with a Overweight rating and a price target of $665.00.

The analyst comments "Benefiting from strong hyperscaler/datacenter activity, Synopsys has seen a substantial improvement in metrics over the past four years: growing at 15% CAGR and expanding operating margins by 1000bps since 2019. Looking ahead, two transformative transactions could line up Synopsys for further margin expansion: 1.) acquisition of margin accretive Ansys with hundreds of millions in potential synergies in the years following close, and 2) the sale of the Software Integrity Group (SIG), as >90% of the margin expansion in the last three years has come from the Semiconductor & System Design group, not SIG. While the integration of ANSS & the horizon for potential synergies does create higher execution risk, we believe the sale of SIG will be a positive catalyst that reorients the conversation on core margin expansion near-term. Initiating coverage at Overweight with a $665 PT."

For an analyst ratings summary and ratings history on Synopsys click here. For more ratings news on Synopsys click here.

Shares of Synopsys closed at $578.87 yesterday.

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