Sometimes the stock market just doesn't make sense at first glance. Synopsys, Inc. (SNPS) delivered a strong fourth-quarter earnings report Thursday morning, complete with guidance that blew past analyst expectations. And yet, shares are trading lower. Welcome to the wonderful world of "sell the news."
The Numbers Look Pretty Good
Synopsys reported adjusted earnings per share of $2.90, comfortably beating the consensus estimate of $2.78. Revenue came in at $2.25 billion, edging past expectations of $2.24 billion. The revenue growth from the prior year period benefited partly from contributions from Ansys, which the company has been working to integrate.
Management sounded optimistic about the road ahead, pointing to a strong backlog heading into fiscal 2026. They called the quarter a solid finish to a year focused on product expansion and integration efforts. The emphasis remains on innovation, operational efficiency, and fully incorporating Ansys as Synopsys builds out its engineering solutions platform.
Guidance That Actually Impressed
For the first quarter, Synopsys sees adjusted earnings per share between $3.52 and $3.58, well above the consensus estimate of $3.31. Revenue is expected to land between $2.36 billion and $2.41 billion, compared to the estimate of $2.37 billion.
The full-year fiscal 2026 outlook is even more striking. The company anticipates adjusted earnings per share of $14.32 to $14.40, crushing the consensus estimate of $12.85. Revenue guidance of $9.56 billion to $9.66 billion dramatically exceeds the $7.04 billion analysts were expecting.
Analysts Weigh In
Following the earnings release, analysts made their moves. Piper Sandler's Clarke Jeffries maintained an Overweight rating but trimmed the price target from $630 to $602. Needham's Charles Shi kept a Buy rating and raised the target from $550 to $580. B of A Securities' Vivek Arya upgraded Synopsys from Neutral to Buy, lifting the price target from $500 to $560. Keybanc's Jason Celino maintained an Overweight rating and bumped the target from $575 to $600.
At the time of writing, Synopsys shares were trading 1.09% lower at $470.65.
