Synopsys’ FY21 Guidance Tops The Street’s Call; Needham Raises PT

Synopsys provided better-than-expected fiscal 2021 guidance after the software company’s 4Q earnings topped analysts’ estimates. Shares are up over 1% in Thursday’s pre-market trading.

Synopsys’ (SNPS) 4Q earnings of $1.58 per share grew 37.4% year-over-year and beat the Street’s estimates of $1.57. Revenue rose 20.1% to $1.03 billion and was in-line with analysts’ estimates.

As for 1Q, the company guided EPS to be in the range of $1.44-$1.49, topping the consensus estimate of $1.43 per share. Synopsys expects to generate 1Q sales of between $935-965 million, falling short of the Street’s call of $968.9 million.

For fiscal 2021, Synopsys anticipates EPS in the range of $6.23-$6.30, topping analysts’ estimates of $6.16. Revenues are projected to amount to $4 billion-4.05 billion in FY21, compared to the $3.98 billion estimated by analysts. (See SNPS stock analysis on TipRanks)

The company’s co-CEO Aart de Geus said, “In fiscal 2021, we aim to surpass $4 billion in revenue, with continued non-GAAP operating margin expansion, low-to-mid teens non-GAAP earnings per share growth, and more than $1 billion in operating cash flow.” He added, “Looking forward, market demand is strong, fueled by complex technologies and a multitude of high-profile verticals. Our innovation engine continues to deliver highly advanced capabilities throughout the portfolio.”

Following the results, Needham analyst Richard Valera raised the stock’s price target to $240 (6.8% upside potential) from $215 and maintained a Buy rating. Valera said, “While F21 appears to be a rebuilding year for SNPS’ SIG [software integrity group] business, the strength of its EDA [electronic design automation] and IP [intellectual property] businesses, underpinned by strong design activity in AI [artificial intelligence], 5G, HPC [high performance core] and Auto, still supports a robust outlook.”

Meanwhile, the Street has a bullish outlook on the stock with a Strong Buy analyst consensus. The average price target stands at $255 and implies upside potential of about 13.5% to current levels. Shares have gained by 61.4% year-to-date.

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