Synopsys Stock Rebounds After Analysts See Buying Opportunity
ByAinvest
Friday, Sep 12, 2025 9:46 pm ET1min read
SNPS--
The market reaction was swift, with Synopsys shares declining by 0.77% during regular trading hours and then slightly recovering by 0.48% in aftermarket trading to close at $612.01 [1]. Despite the earnings miss, the stock has shown remarkable strength, with a 34% return over the past six months, though it is currently overvalued, trading at a P/E ratio of 68.9x [1].
Investment banks have responded to the earnings miss with varying opinions. Some have downgraded the stock, citing concerns about the company's ability to meet its guidance for Q4 2025 and fiscal year 2025. However, Mizuho sees a buying opportunity, noting Synopsys' ability to sustain growth, focus on profitability, and pay down debt [1].
The company's CEO, Sassine Ghazi, emphasized the company's leadership in engineering solutions and the transformative potential of physical AI during the earnings call. Despite the earnings miss, Synopsys continues to expand its engineering solutions portfolio with strategic acquisitions and innovations [1].
Looking ahead, Synopsys provided revenue guidance for Q4 2025, projecting between $2.23 billion and $2.26 billion, and set a fiscal year 2025 revenue target of $7.03 billion to $7.06 billion [1]. The company is focusing on higher-value IP solutions and subsystem delivery to capitalize on the evolving semiconductor IP landscape.
Synopsys stock fell 36% after missing Q3 2025 earnings and forecasting a bigger Q4 miss. Investment banks downgraded the stock, but Mizuho sees a buying opportunity, citing the company's ability to sustain growth, focus on profitability, and pay down debt. Despite the decline, Synopsys stock still trades at 36 times earnings and 55 times trailing free cash flow, making it a potentially overvalued investment.
Synopsys Inc. (SNPS) stock experienced a significant drop of 36% following the release of its Q3 2025 earnings report, which fell short of analyst expectations. The company reported earnings per share (EPS) of $3.39, down from the anticipated $3.80, and revenue of $1.74 billion, below the forecasted $1.77 billion [1].The market reaction was swift, with Synopsys shares declining by 0.77% during regular trading hours and then slightly recovering by 0.48% in aftermarket trading to close at $612.01 [1]. Despite the earnings miss, the stock has shown remarkable strength, with a 34% return over the past six months, though it is currently overvalued, trading at a P/E ratio of 68.9x [1].
Investment banks have responded to the earnings miss with varying opinions. Some have downgraded the stock, citing concerns about the company's ability to meet its guidance for Q4 2025 and fiscal year 2025. However, Mizuho sees a buying opportunity, noting Synopsys' ability to sustain growth, focus on profitability, and pay down debt [1].
The company's CEO, Sassine Ghazi, emphasized the company's leadership in engineering solutions and the transformative potential of physical AI during the earnings call. Despite the earnings miss, Synopsys continues to expand its engineering solutions portfolio with strategic acquisitions and innovations [1].
Looking ahead, Synopsys provided revenue guidance for Q4 2025, projecting between $2.23 billion and $2.26 billion, and set a fiscal year 2025 revenue target of $7.03 billion to $7.06 billion [1]. The company is focusing on higher-value IP solutions and subsystem delivery to capitalize on the evolving semiconductor IP landscape.
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