SNPS - Embedded Expectations Analysis - 2021 07 30
Synopsys, Inc. (SNPS:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 41.4x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may be concerned about margin expansion, organic revenue growth, and semiconductor demand.Specifically, management may lack confidence in their ability to sustain margin expansion, strong organic revenue growth, and EPS improvements. Additionally, they may have concerns about the Electronic Design Automation (EDA) ecosystem, near-term demand for semiconductors, and the growing complexity in chip systems. Moreover, management may be exaggerating the performance of their ZeBu Empower emulation system, the impact of the MorethanIP acquisition on their high-performance computer market share, and the potential of the Silicon Life Cycle Management Platform (SLM) to optimize chip design flow. Furthermore, they may have concerns about rising manufacturing equipment prices, the impact of R&D spending and manufacturing capacity investments, and the sustainability of new logo adds and retention. Finally, management may lack confidence in their ability to meet increased guidance and they may have concerns about Software Integrity operations
and the long-term opportunities in the automotive space.
Synopsys is a supplier of electronic design automation (EDA) software that engineers use to design and test integrated circuits. The company also provides semiconductor intellectual property products, which are pre-designed circuits that engineers use as components of larger chip designs rather than designing those circuits themselves. The company provides software and hardware used to validate the electronic systems that incorporate chips and the software that runs on them. The company is also a provider of software tools and services that improve the security and quality of software code in a variety of industries, including electronics, financial services, media, automotive, medicine, energy and industrials.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.