Stockchase Opinions

David Fingold Synopsys Inc SNPS-Q Unspecified Apr 25, 2022

One of two companies that dominate in the electronic design automation space. There is a technology overhang of software so the downside is that software is out of favour now. Also potentially affected by the shortage in semi-conductors, There is good growth in the old economy so investors already have their investment positions in software.
$290.860

Stock price when the opinion was issued

Technology
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BUY

They do electronic design automation for all the chips, including Nvidia's. They report in two weeks. Is up 50% since breaking out in June.

TOP PICK

Took off once the US 10-year rate came down. Profitable, but highly leveraged. Electronic design automation products to design and test integrated semiconductor circuits. Lots of horses. Leader in EDA, which will help semi industry with labour shortages. Buy here around $518, again just shy of $500. Shouldn't go under $470, and definitely not under $450. No dividend.

(Analysts’ price target is $611.38)
PARTIAL BUY

Might want to write some calls. For quite a pretty penny, bought a company that does visualizations and simulations. You can own it here around $550, more at $520, and just south of $500.

(Analysts’ price target is $610.00)
HOLD

February 21 earnings banged it out of the park. Raised guidance, a rare event. 12-month target of $648, still decent runway left. If looking to buy in, try in stages at $570-575, and $525.

BUY

Their software is powering Nvidia to make GPU chips. SNPS shares have run up as a result, though weakened in the past month. Price-to-cash flow is estimated to fall between 2025 and 2026, so the street expects the company to grow a lot. He believes AI will continue to grow. SNPS's valuation isn't extreme like others in AI.

DON'T BUY

It trades in line with NVDA, which is going down (though he likes it).

PAST TOP PICK
(A Top Pick Dec 27/23, Down 6%)

Still owns this and CDNS and Ansys stock, a peer, which dominate this space. The stock is stuck because it's stuck in UK regulations, though he expects it to be approved next year. When it does, SNPS will be the king of this space. His price target is $648. They last beat the top and bottom lines. Buy this at $440-460 or even now.

TOP PICK

They boast a good moat and are in a duopoly. They help build computer chips, a huge industry. They are buying Ansys, a similar company with industrial applications.

(Analysts’ price target is $638.60)
BUY

Digital twins to diagnose machinery problems. 12-month price target of $618, mainly because of its upcoming purchase of a UK company which will make SNPS the king of the hill. Will become the go-to for electronic design software.

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Curated by Allan Tong since 2019.
99+ opinions with 4.15 rating.

TOP PICK

However, if you want a higher return and can swallow the risk, then SNPS on the Nasdaq could more your speed. The tech company enjoys a duopoly in semiconductor design. Their Anysys acquisition should add value, while AI will continue to be a tailwind. Its EBITDA per share growth lies in the top 10% com-pared with peers globally. Earnings are robust and have beaten in the last four quarters with room to spare.