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Synopsys Enhances Coverity Portfolio with Goanna Takeover

Growing through strategic acquisitions has been one of the key strategies of Synopsys Inc.SNPS . Keeping with this, the company recently announced the buyout of Goanna Software. However, the financial terms of the deal have not been disclosed.

Australian-based Goanna offers static code analysis tools that meet the industry coding standards and compliances which improve the code quality while reducing security vulnerabilities. Therefore, the integration of Goanna will enable Synopsys to enhance its static code analysis solution capabilities.

Currently, Synopsys provides static code analysis solutions under the Coverity product suite. The recent acquisition will improve Coverity's analysis capabilities while enhancing security and quality.

Furthermore, Synopsys in its press release revealed that "[it] will leverage Goanna Software's technology to improve the Coverity Software Development Kit (SDK) to enable customers to more easily develop dedicated static analysis rules and checkers for their specific use cases".

Therefore, we believe that Goanna will enable Synopsys to offer a more comprehensive portfolio of software solutions. Moreover, through the acquisition Synopsys will gain the former's customers thereby boosting the top line.

The recent acquisition is in line with Synopsys' continued investments toward enhancing the software security product portfolio. To strengthen its presence in the software security market, the company acquired Codenomicon Oy and Elliptic Technologies in June.

Moreover, Synopsys has taken over certain assets of Quotium Technologies, including the Quotium Seeker product and the R&D team. We believe that these acquisitions will enhance its presence in this market while expanding the product portfolio and quality of its wholly owned subsidiary, Coverity.

Synopsys sells electronic design automation (EDA) software to the semiconductor and electronics industries. In the current economic scenario, customers are strengthening their supplier relationships while focusing on cost efficiencies, and many have selected Synopsys as their primary EDA partner.

Acquisitions have helped Synopsys to gain access to newer markets and technologies. Also, since intensifying competition is making the EDA market tougher to penetrate into, acquisitions have boosted the company's revenues. The company recently reported fourth-quarter fiscal 2015 results wherein revenues witnessed a year-over-year increase of 8.9%.

We believe that the company's sustained focus on product launches, acquisitions and deal wins will aid results, going ahead. Apart from this, unique intellectual properties and global support provided by the company will drive results. Additionally, the company's acquisitions will expand its reach in the software quality, testing and security tools market.

However, competition from Cadence Design Systems Inc. CDNS and Mentor Graphics Corp. MENT coupled with a challenging technology spending environment and uncertainty regarding the exact time of realizing acquisition synergies keep us on the sidelines.

Currently, Synopsys has a Zacks Rank #3 (Hold). A well-ranked stock in the technology sector is Citrix Systems Inc. CTXS sporting a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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