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Synopsys (SNPS) Scoops Up Code Dx to Boost App-Security Portfolio

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Synopsys, Inc. (SNPS - Free Report) announced the acquisition of application security risk management solution provider — Code Dx — to provide its customers with risk reporting capabilities across correlated software vulnerability data. The acquisition also adds a team of experts in vulnerability correlation. This team of engineers will integrate security testing activity across the entire software development pipeline.

The deal is not expected to meaningfully impact Synopsys’ financials. However, it will add significant value to the company’s portfolio of application security solutions. The terms of the transaction were not disclosed.

Notably, Code Dx was a member of the Synopsys Technology Alliance Partner (TAP) program, through which Synopsys supported the integration of the former with its product portfolio. Therefore, customers will be able to immediately start using Code Dx's offerings in tandem with Synopsys’ products.

Importantly, modern software development is much more complex and faster, requiring numerous security testing technologies and rapid testing cycles. Robust security testing done to secure modern software often gives rise to a large number of vulnerability data that are difficult to manage quickly. The integration of Code Dx prioritizes security testing results based on risks, thus addressing the abovementioned challenges.

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.

Most recently, last month, Synopsys fortified its DesignWare Ethernet Controller IP portfolio with the acquisition of MorethanIP.

Moreover, 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, Synopsys is considered a lower-leveraged company. Its total debt-to-total capital ratio of 0.15 is significantly lower than the industry’s average of 0.43. As of Apr 30, 2021, the company’s total debts (including current maturities) were $25.6 million, while its cash and equivalents were $1.46 billion. Moreover, the company’s strong cash-flow generation capability is noteworthy. In fiscal 2020, Synopsys has generated an operating cash flow of $991.3 million. Notably, the company’s operating cash flows have grown significantly from $424.4 million in fiscal 2018 to $991.3 million in fiscal 2020. Such a strong balance sheet makes it easier for Synopsys to pursue strategic acquisitions to boost growth.

Zacks Rank & Other Stocks to Consider

Synopsys currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader technology sector include Silicon Motion Technology Corporation (SIMO - Free Report) , Lam Research Corporation (LRCX - Free Report) and LG Display Co., Ltd. (LPL - Free Report) , all 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 Silicon Motion Technology Corporation, Lam Research and LG Display is currently pegged at 8%, 32.8% and 32.56%, respectively.

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