Stifel reiterates Synopsys stock rating on AI partnerships

Stifel has reaffirmed a Buy rating and set a $600.00 price target on Synopsys (NASDAQ:SNPS) after the company announced new AI partnerships and provided financial guidance. The stock is currently trading at $434.94, with analyst consensus showing a Strong Buy rating and price targets ranging from $415 to $700. Synopsys has collaborated with OpenAI to jointly offer a post-trained OpenAI model built on their tools, agents, and workflows as a bundled service, with Synopsys earning tool licenses plus an outcome-based revenue share.

Amazon and Amazon Web Services (AWS) have also entered into multi-year, over $1 billion licensing agreements. Synopsys has outlined long-term targets, including a mid-teens revenue compound annual growth rate through fiscal year 2030, a 15% floor, approximately 50% adjusted operating margin, and $35 adjusted earnings per share in fiscal year 2030.

The company's performance has outperformed analysts' expectations, with a 46% revenue growth over the last twelve months and an impressive gross profit margin of 83%. Despite being slightly overvalued according to InvestingPro analysis, Synopsys maintains a GOOD financial health score. Various analyst firms have shown optimism for Synopsys, including Rosenblatt raising its price target to $620, HSBC upgrading to a Buy with a $700 target, Benchmark reaffirming a Buy rating, Morgan Stanley upgrading to Overweight with a $500 target, and Baird upgrading to Outperform with a $560 target.