Synopsys Posts Upbeat Q4 Results, Offers Guidance

California-based electronic design automation firm Synopsys, Inc. (SNPS) announced strong financial results for the fiscal fourth quarter ended October 31 after the market closed on Wednesday.

The company offers silicon design and verification, silicon intellectual property and software security and quality services. Its shares closed 1.8% lower at $334.75 on Wednesday.

Q4 Results

Adjusted earnings came in at $1.82 per share, compared to $1.58 per share in the previous year and the Street’s estimate of $1.78 per share.

Revenue totaled $1.152 billion, higher than the year-ago figure of $1.025 billion and analysts’ expectations of $1.14 billion. (See Insiders’ Hot Stocks on TipRanks)

Management Comments

The Chairman and Co-CEO of Synopsys, Aart de Geus, said, “Synopsys delivered another record fiscal year in 2021, substantially exceeding our original targets, with strength in all product groups and geographies.”

“In addition to Fiscal Year 2022 expectations of strong double-digit revenue growth, continued operating margin expansion, EPS growth in the mid-teens range, and nearly $1.5 billion in operating cash flow, we are also raising our long-term financial objectives, with increased EDA and IP revenue growth expectations.”

Outlook

Along with the fourth-quarter results, the company also issued guidance for the fiscal first quarter ending January 31, 2022, and the Fiscal Year ending October 31, 2022.

In the first quarter, Synopsys expects revenue and adjusted earnings per share (EPS) to range from $1.25 billion to $1.28 billion and $2.35 to $2.40, respectively. The Street estimates the company to post revenue of $1.11 billion and earnings of $1.76 per share.

For the Fiscal Year 2022, revenue is expected to range from $4.725 billion to $4.775 billion, and adjusted EPS between $7.73 and $7.80. Analysts expect the company to report adjusted EPS of $7.65.

CFO Retirement

Meanwhile, the company announced that CFO Trac Pham plans to retire next year. Pham, who has been Synopsys’ CFO since 2014, will continue in his current role until a successor is appointed.

De Geus said, “As CFO, Trac was instrumental in driving our company’s transformation – accelerating margin and EPS growth while ensuring sufficient investments to best serve our customers and accelerate revenue growth.”

Stock Rating

Overall, the stock has a Moderate Buy consensus rating based on 4 Buys and 1 Sell. The average Synopsys price target of $360 implies 7.5% upside potential. Shares have gained nearly 49% over the past year.

Risk Analysis

According to the TipRanks’ Risk Factors tool, Synopsys is at risk mainly from two factors: Tech & Innovation and Macro & Political, which account for 31% and 23%, respectively, of the total 26 risks identified for the stock.

Under the Tech & Innovation risk category, the company has eight risks, and under the Macro & Political category, there are six risks. The details of these risks can be found on the TipRanks’ website.

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