Tech giants grapple with volatile market shifts as geopolitical tensions and competitive pressures reshape the semiconductor landscape. Shares of Synopsys Inc (NASDAQ:SNPS) tanked in early trading on Wednesday, after the company reported downbeat fiscal third-quarter results.
Here are some takeaways from analysts:
- BofA Securities analyst Vivek Arya downgraded the rating from Buy to Underperform, while slashing the price target from $625 to $525.
- Needham analyst Charles Shi maintained a Buy rating, while reducing the price target from $660 to $550.
Check out other analyst stock ratings.
BofA Securities: Synopsys reported a surprise miss in IP deliveries, Arya said in the downgrade note. The company's design IP business missed fiscal third-quarter expectations by around $140 million due to China export restrictions and Intel Foundry weakness, he added.
The analyst cited three reasons for the downgrade:
- Surprising restructuring required in the company's core IP business, which is facing stiff competition with Arm Holdings PLC (NASDAQ:ARM).
- Continued uncertainty around top customer Intel Corp's (NASDAQ:INTC) foundry potential.
- Higher costs are associated with the integration of the Ansys acquisition, amounting to around $35 billion.
Needham: Synopsys reported mixed results for the fiscal third quarter, with revenues of $1.74 billion missing Needham's estimate of $1.79 billion, Shi said. The company guided to fiscal fourth quarter revenues of $2.25 billion, he added.
The guidance came meaningfully below Needham's $2.62 billion estimate, which incorporated "the full-quarter impact" of the Ansys acquisition, the analyst stated. The company's surprise IP weakness may have been due to China, a foundry customer that is likely Intel, and "product market misfit," he further wrote.
SNPS Price Action: Synopsys shares were down 35.00% at $392.84 at the time of publication on Wednesday. The stock is trading near its 52-week low of $365.74, according to Benzinga Pro data.
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