Synopsys, Inc. ( SNPS Quick Quote SNPS - Free Report) recently announced that it is on track to fortify its DesignWare Ethernet Controller IP portfolio with the acquisition of MorethanIP. Notably, the company has inked a definitive acquisition agreement for an undisclosed amount and is likely to close the transaction in May this year. Adding MAC and PCS for 200G/400G and 800G Ethernet is expected to strengthen Synopsys’ existing 112G Ethernet PHY IP. Moreover, MorethanIP’s team of highly qualified and experienced R&D engineers will also enhance the expertise of Synopsys’ workforce with their strong domain knowledge. The acquisition will help Synopsys provide a high-performance Ethernet IP solution, with low latency for networking, AI, and cloud computing SoCs, to customers. Notably, the terms of the deal are not likely to affect its financials.
Acquisition Drives Growth Synopsys has made a few important acquisitions to build its product portfolio and stimulate growth. Acquisitions are central to the company’s growth strategy and helping it gain access to newer markets and technologies. Also, since intense competition is making the Electronic Design Automation (EDA) market tougher to penetrate, acquisitions have helped the company boost revenues. Notably, the acquisitions of Cigital and Black Duck are establishing tactical quality relations with clients, leading to higher demand creation, cross-selling and a substantial rise in brand recognition. Markedly, the growing demand for advanced technology, design, IP and security solutions is also creating solid prospects. Per MarketsandMarkets, the global semiconductor IP market is projected to reach $7.3 billion by 2025, at a CAGR of 5.5% from 2020. This projection seems encouraging for the prospects of the acquisition of MorethanIP. Moreover, Synopsys is considered a lower-leveraged company. Its total debt-to-total capital ratio of 0.15 is significantly lower than the industry average of 0.43. As of Jan 31, 2021, the company’s total debts (including current maturities) were only $25.7 million, while its cash and equivalents were $1.02 billion. This positions the company to comfortably pursue important acquisitions to boost growth. Zacks Rank & Stocks to Consider Synopsys currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader technology sector are Ubiquiti Inc. ( UI Quick Quote UI - Free Report) , Vishay Intertechnology ( VSH Quick Quote VSH - Free Report) and Etsy, Inc. ( ETSY Quick Quote ETSY - Free Report) , each sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here. The long-term earnings growth rate for Ubiquiti, Vishay Intertechnology and Etsy is currently pegged at 32.94%, 20.26% and 25.25%, respectively. 5 Stocks Set to Double Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. Today, See These 5 Potential Home Runs >>