BofA Securities upgraded Synopsys (NASDAQ: SNPS) to Neutral from Underperform while lowering its price target to $500 from $525, saying the company’s upcoming December 10 earnings call could help clarify prior concerns about China-related weakness, Intel IP performance and integration costs tied to Ansys.
The analyst said revenue expectations for FY26 and FY27 remained largely intact, but EPS forecasts were trimmed by 4% for both years due to uncertainty surrounding cost synergies from the Ansys acquisition. Even with the adjustments, BofA argued that sentiment catalysts were building, including Nvidia’s proposed $2 billion equity investment and the potential for Intel to gain traction at its 18A and 14A nodes.
BofA also highlighted Synopsys’ valuation discount relative to peer Cadence, noting that the current 10-turn PE gap exceeded the historical 6-turn spread. The firm said shares showed catch-up potential after underperforming year-to-date. Risks included heavy exposure to China IP and integration challenges with Ansys. The revised price target of $500 reflected a 34x CY26 earnings multiple, consistent with the historical range of 24x to 46x.
