Shares of Synopsys Inc.SNPS have been gaining solid momentum of late. One of the major reasons behind this could be the company's better-than-expected results for third-quarter fiscal 2016, along with an upbeat guidance for the full fiscal year.
Since its last quarterly earnings release on Aug 17, the stock has gained nearly 7% and touched a new 52-week high of $59.80 on Friday. Year to date, the stock has gained nearly 31%.
SYNOPSYS INC Price
In the third quarter, the company's adjusted earnings as well as revenues surpassed the Zacks Consensus Estimate and witnessed year-over-year growth, backed mainly by higher adoption of Synopsys' products and strength in hardware products.
Buoyed by a strong third-quarter performance, Synopsys provided an encouraging fourth-quarter guidance and raised its fiscal 2016 expectations.
Notably, this Zacks Rank #3 (Hold) stock has surpassed the Zacks Consensus Estimate in three out of the last four quarters with an average positive surprise of 25.1%.
Furthermore, the company has recently increased its share repurchase authorization to $500 million. We believe that an aggressive share buyback policy will boost investor confidence in the stock, thereby driving the stock price upward, going ahead.
Synopsys is a provider of electronic design automation (EDA) software to the semiconductor and electronics industries. Synopsys has also made a few important acquisitions to build its product portfolio and drive growth. Acquisitions are central to the company's growth strategy, and help it gain access to newer markets and technologies. Also, since intense competition is making the EDA market tougher to penetrate, takeovers have helped the company to boost its top line.
Furthermore, we believe the company's recent product launches, acquisitions and deal wins will propel results, going ahead. Moreover, unique intellectual properties and global support provided by the company will likely provide it boost in the upcoming quarter.
However, competition from Cadence Design Systems Inc. CDNS and Mentor Graphics Corp. MENT , a challenging technology spending environment, and uncertainty regarding the exact time of realizing acquisition synergies keep us on the sidelines.
A Stock to Consider
A stock worth considering in the technology sector is NVIDIA Corp. NVDA , which sports a Zacks Rank #1 (Strong Buy).
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report