Piper Sandler analyst Clarke Jeffries initiated coverage on Synopsys Inc (NASDAQ:SNPS) with an Overweight rating and a price target of $665.
The analyst noted that from solid hyperscaler and data center activity, Synopsys has seen a substantial improvement in metrics over the past four years, growing at 15% CAGR and expanding operating margins by 1000bps since 2019.
Two transformative transactions could line up Synopsys for further margin expansion, including the acquisition of margin accretive ANSYS, Inc (NASDAQ:ANSS) with hundreds of millions in potential synergies in the years following the close and the sale of the Software Integrity Group (SIG), as over 90% of the margin expansion in the last three years has come from the Semiconductor & System Design group, not SIG, as per Jeffries.
While the integration of Ansys & the horizon for potential synergies create higher execution risk, he noted the sale of SIG will be a positive catalyst that reorients ...Full story available on Benzinga.com
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