Synopsys (SNPS.US) stock price crashed after results, Wall Street analysts “bargained and downgraded”

The Zhitong Finance App learned that due to the results and guidelines for the third fiscal quarter falling short of expectations, Synopsys (SNPS.US) stock prices later plummeted, and some Wall Street analysts also lowered the stock's rating and target price.

Baird downgraded Synopsys' rating from “outperforming the market” to “neutral” and lowered the target price from $670 to $535.

Analyst Baird, led by Joe Vruwink, said, “People have high expectations for the fundamentals of Ansys transactions and design automation, but there have been significant changes in the design intellectual property (IP) outlook (including restrictions on business in China, changes in customer behavior, etc.).”

In July of this year, Synopsys closed a $35 billion deal to acquire Ansys.

Analyst Baird pointed out that after adjusting intellectual property risk factors, the company's fourth fiscal quarter performance guidance was significantly lower than expected, and the outlook for the intellectual property business in FY2026 was also weak.

Morgan Stanley maintains Synopsys' “Overweight” rating, with a target price of $715.

A team of analysts led by Lee Simpson said that although the core electronic design automation (EDA) business achieved solid results in the third quarter, the design intellectual property business unexpectedly weakened. The company claims it is taking steps to address this issue.

Analysts added that revenue guidance for the fourth fiscal quarter was higher than market expectations, but that was because Ansys was included to offset the weakness in the intellectual property business.

“Additionally, after acquiring Ansys, Synopsys will face some challenges in preparing new financial reports,” said Simpson and his team. Despite this, the potential weakness in earnings indicates that the company's performance clearly fell short of expectations, which is quite different from the company's previous performance.”

Needham maintained Synopsys' “buy” rating, but lowered the target price from $660 to $550.

Analysts led by Charles Shi said, “Following the completion of the acquisition of Ansys in mid-July, Synopsys published mixed financial reports. Among them, the intellectual property business did not perform well, and this factor has always been an important reason for Synopsys' stock price fluctuations in the past. ”

Analysts pointed out that investors have reason to question whether the intellectual property issue is structural or temporary.

Shi and his team said, “Although we are surprised that these two major factors, the Chinese business and Intel, are still impacting Synopsys, we believe these two headwinds will eventually pass. The transformation of the IP business model to 'larger IP' (such as subsystems and chips) and its impact on profit margins will be our focus.”

Additionally, Wells Fargo reiterated its “hold” rating for Synopsys, but lowered the target price from $630 to $550.

As of Wednesday's close, Synopsys closed down 35.84% to $387.78.