Analyst Confidence Grows for Synopsys Stock Recovery

Investor attention is returning to Synopsys following its significant September downturn, with Mizuho Securities reinforcing its positive stance on the semiconductor design company. The investment bank maintained its buy recommendation and established a $600 price target, suggesting potential upside of approximately 32% from current levels. This optimistic outlook comes despite shares remaining down 36% from recent highs.

Mizuho analyst Siti Panigrahi continues to express confidence in Synopsys's long-term prospects despite turbulent third-quarter performance. The $600 price objective reflects substantial faith in the company's strategic direction, particularly regarding the integration of recently acquired Ansys.

Synopsys reached a critical milestone on October 17 with the completion of its Optical Solutions Group sale to Keysight Technologies. This transaction, coupled with the divestiture of Ansys's PowerArtist business, satisfies the final regulatory requirements for the $35 billion Ansys acquisition that concluded in July.

These strategic sales enhance Keysight's portfolio with tools including CODE V and LightTools while allowing Synopsys to sharpen its focus on core operations. According to Keysight's Niels Faché, the acquired capabilities will enable "more precise power, optics, and photonics design decisions" for customers.

Should investors sell immediately? Or is it worth buying Synopsys?

Quarterly Performance Shows Mixed Results

The company's third-quarter financial results revealed earnings of $3.39 per share, falling short of the $3.75 consensus estimate. Revenue demonstrated healthier growth, climbing 14% to reach $1.74 billion, though weakness in the Design-IP segment substantially impacted overall performance.

Market restrictions in China and challenges with a "major foundry partner"—widely believed to be Intel—contributed to the disappointing figures. Conversely, the Design Automation segment remained robust, accounting for 75.4% of total revenue.

Long-Term Growth Drivers Remain Strong

Despite near-term headwinds, Synopsys continues to benefit from exposure to major technology trends including artificial intelligence, data center development, and automotive electronics. CEO Sassine Ghazi emphasized the company's strategic position, stating that "Synopsys serves as the mission-critical partner that technology R&D requires for AI-driven products."

Trading around $453 per share, Synopsys stock carries a price-to-earnings ratio of approximately 60. While still substantially below its July peak of $651.73, Mizuho's $600 target indicates potential for meaningful recovery as the company navigates post-acquisition integration and capitalizes on enduring industry tailwinds.