Value
4.0/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 0.0 |
| P/S | 3.7 |
| Fwd P/E | 4.9 |
| PEG | 4.1 |
| Analyst target | 7.5 |
- ▸Forward P/E: 25.3x
- ▸PEG: 2.44
SNPS · Why this verdict
Why Synopsys (SNPS) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score5.0/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Synopsys achieved 42% year-over-year revenue growth and a Rule-of-40 score of 83 — placing it in the highest echelon of software infrastructure companies globally — with 458% free cash flow conversion of net income reflecting exceptional capital efficiency. Growth breakdown | Revenue growth remains above 25% year-over-year and the Rule-of-40 score stays above 60 for at least 2 of the next 4 reported quarters. | →Stable |
| CounterConsecutive earnings misses in 2 of the last 4 quarters, including a -72.8% EPS miss most recently, suggest the revenue growth narrative has not translated into expected bottom-line execution. | ||
Synopsys has missed EDA analyst earnings estimates in 2 of the last 4 quarters, including a severe -72.8% miss in the most recent quarter, creating a pattern that undermines confidence in near-term earnings predictability. Earnings | The company delivers consecutive earnings beats in at least 2 of the next 3 reported quarters, resetting the estimate credibility. | →Stable |
| CounterThe two beat quarters produced extraordinary surprises of 11.6x and 12.5x, suggesting the miss-beat volatility reflects genuine timing lumpiness in license revenue rather than a structural deterioration in the business. | ||
With RSI at 26, the stock is approaching capitulation territory, trading below all major moving averages with a 200-day slope declining at -3.7% over 30 days and declining on-balance volume — all three technical factors pointing to sustained selling pressure. Momentum breakdown | RSI recovers to above 40 and price reclaims the 200-day moving average within 6 months, signaling the capitulation phase is ending. | →Stable |
| CounterTechnical capitulation at RSI 26 often marks a turning point where forced sellers have been exhausted; Bollinger Band and support/resistance scores of 8.4 and 9.0 indicate the stock is at significant technical support. | ||
Despite the technical distress, analyst consensus implies 23% upside to $504 from the current $454, and the stock scores 7.0 out of 10 on sentiment — indicating that fundamental analysts see the distress as an overshoot relative to intrinsic value. Sentiment breakdown | Price rises above $500, recovering more than 10% from the current $454, within 12 months as the market re-rates on improving earnings visibility. | →Stable |
| CounterAnalyst targets may be stale and will be revised downward following the two recent earnings misses; the pending C-suite officer departure flagged in 8-K adds additional uncertainty to the near-term execution picture. | ||
Synopsys achieved 42% year-over-year revenue growth and a Rule-of-40 score of 83 — placing it in the highest echelon of software infrastructure companies globally — with 458% free cash flow conversion of net income reflecting exceptional capital efficiency.
→StableGrowth breakdown
- Expectation
- Revenue growth remains above 25% year-over-year and the Rule-of-40 score stays above 60 for at least 2 of the next 4 reported quarters.
CounterConsecutive earnings misses in 2 of the last 4 quarters, including a -72.8% EPS miss most recently, suggest the revenue growth narrative has not translated into expected bottom-line execution.
Synopsys has missed EDA analyst earnings estimates in 2 of the last 4 quarters, including a severe -72.8% miss in the most recent quarter, creating a pattern that undermines confidence in near-term earnings predictability.
→StableEarnings
- Expectation
- The company delivers consecutive earnings beats in at least 2 of the next 3 reported quarters, resetting the estimate credibility.
CounterThe two beat quarters produced extraordinary surprises of 11.6x and 12.5x, suggesting the miss-beat volatility reflects genuine timing lumpiness in license revenue rather than a structural deterioration in the business.
With RSI at 26, the stock is approaching capitulation territory, trading below all major moving averages with a 200-day slope declining at -3.7% over 30 days and declining on-balance volume — all three technical factors pointing to sustained selling pressure.
→StableMomentum breakdown
- Expectation
- RSI recovers to above 40 and price reclaims the 200-day moving average within 6 months, signaling the capitulation phase is ending.
CounterTechnical capitulation at RSI 26 often marks a turning point where forced sellers have been exhausted; Bollinger Band and support/resistance scores of 8.4 and 9.0 indicate the stock is at significant technical support.
Despite the technical distress, analyst consensus implies 23% upside to $504 from the current $454, and the stock scores 7.0 out of 10 on sentiment — indicating that fundamental analysts see the distress as an overshoot relative to intrinsic value.
→StableSentiment breakdown
- Expectation
- Price rises above $500, recovering more than 10% from the current $454, within 12 months as the market re-rates on improving earnings visibility.
CounterAnalyst targets may be stale and will be revised downward following the two recent earnings misses; the pending C-suite officer departure flagged in 8-K adds additional uncertainty to the near-term execution picture.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Synopsys delivers 42% revenue growth and an elite Rule-of-40 score of 83, but the stock is in deep technical distress with RSI at 26 near capitulation levels, consecutive earnings misses, and a forward P/E of 26.3x that prices in a recovery the fundamentals have yet to validate.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 1.3 |
| ROA | 1.0 |
| Gross margin | 10.0 |
| Op margin | 4.2 |
| Net margin | 4.5 |
| Current ratio | 5.3 |
| FCF quality | 10.0 |
| Moat | 7.1 |
| Rule of 40 | 9.5 |
| Piotroski F | 7.8 |
- ▸Excellent cash conversion: 458% FCF/NI
- ▸Rule of 40: 83 (elite)
- ▸Strong Piotroski F-Score: 7/9
Growth
5.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 0.0 |
- ▸Strong growth: 42% YoY
Momentum
1.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 1.0 |
| Volume | 1.1 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA, MA slope -3.5%/30d — confirmed downtrend
Sentiment
8.1/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 8.5 |
| Analyst rating | 7.5 |
| Price target | 8.5 |
- ▸LLM news sentiment: +0.70 (n=1)
- ▸Analyst upside: 29%
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Insider selling (low materiality) — $8,229,594 (0.010% of mkt cap)
Peer rank
3.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.6 |
| quality rank | 4.5 |
| growth rank | 8.6 |
- ▸Industry growth leader
Technical
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 9.6 |
| support resistance | 9.6 |
| 52w position | 3.4 |
Risk (lower is worse)
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.5 |
| days to cover | 8.0 |
| volatility | 2.8 |
| put call | 6.1 |
| implied vol | 3.0 |
| max pain risk | 3.0 |
| beta | 6.1 |
| debt equity | 8.6 |
- ▸High IV: 62%
- ▸Above max pain $310
- ▸Concentration risks: 2 MED (10-K Item 1A)
Catalyst
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 3.3 |
| news activity | 5.0 |
- ▸Strong earnings: 3B/1M
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position. | News modifier +2 (SELL_IF_HOLDING → HOLD_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_F_SELL|L3:NEWS_MOD=+2Passed (6)
- ASYMMETRY:2.1>=1.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:67d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- MOMENTUM:1.3<4.5
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
2.07
Upside
+16.1%
Downside
7.8%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.0 below the 5.4 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Sentiment at 8.1) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:1.3<4.5) reinforce the read. Current asymmetry R:R is 2.07 — supplementary context, not the trigger for this path.
The strongest dimensions are Sentiment at 8.1, Technical at 7.5, and Quality at 6.1; the weakest are Momentum at 1.3, Peer rank at 3.7, and Value at 4.0. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 2.07 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P142pct Revenue Growth Elite Rule Of 40
Trip ifRevenue growth falls below 15% year-over-year for 2 consecutive quarters, indicating the growth rate is decelerating sharply from the 42% reported level.
- P2Consecutive Earnings Misses Signal
Trip ifEPS surprise falls below 0% in at least 3 of the next 4 quarters, confirming the miss pattern is structural rather than timing-driven.
- P3Capitulation Risk At Rsi 26
Trip ifPrice drops below $400, more than 12% below the current $454, confirming that the capitulation phase has not yet reached its floor.
- P4Analyst Upside At Distressed Price
Trip ifAnalyst consensus price target falls below $430, less than 5% below the current price of $454, indicating that analysts are capitulating on their upside case.