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Synopsys Updates 2 Key Risk Factors
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Synopsys Updates 2 Key Risk Factors

Shares of electronic design automation provider Synopsys, Inc. (SNPS) have gained 39.1% over the past 12 months. SNPS recently delivered better-than-expected performance for the fourth quarter on both its top-line and bottom-line fronts. The robust performance was attributed to strength across product groups and geographies.

Furthermore, the company’s Board has approved a new stock buyback program with an authorization of up to $1 billion. Synopsys has entered into an accelerated stock buyback program with HSBC Bank USA, and National Association to buy back an aggregate of $200 million of the company’s shares.

With these developments in mind, let us take a look at what’s changed in Synopsys’ key risk factors that investors should know.

Risk Factors

According to the TipRanks Risk Factors tool, Synopsys’ top two risk categories are Tech & Innovation and Macro & Political, contributing 31% and 23% to the total 26 risks identified, respectively. Compared to a sector average of 16%, Synopsys’ is Tech & Innovation risk factor at 31%.

In its recent annual report, the company has changed two key risk factors.

Under the Production risk category, Synopsys noted that if it is not successful in recruiting and retaining senior management and key employees across the globe, then its business may be adversely affected. The company’s success largely depends on the services of key members of its senior management. However, its employees are often aggressively recruited by competing firms.

Under the Ability to Sell risk category, Synopsys highlighted that it operates in a very competitive market. If it does not continue to meet its customers’ requirements for innovative solutions at lower costs, then its products may not remain competitive or face obsoletion. Consequently, the company’s business and financials may suffer.

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Wall Street’s Take

Needham analyst Charles Shi has reiterated a Buy rating on the stock and increased the price target to $370 from $360 (3% upside potential).

Wall Street’s Top Research Firms have given the stock a Strong Buy consensus rating based on 9 unanimous Buys for the stock. The average Synopsys price target of $386.80 implies a potential upside of 7.75%.

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