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Synopsys (SNPS) to Report Q3 Earnings: What's in Store?
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Synopsys (SNPS - Free Report) is slated to release third-quarter fiscal 2021 results on Aug 18.
Management expects third-quarter revenues between $1.03 billion and $1.06 billion. The Zacks Consensus Estimate for the top line is currently pegged at $1.04 billion, indicating 8.3% year-on-year growth.
Management expects non-GAAP earnings between $1.75 and $1.80 per share. Notably, the consensus mark for earnings is pegged at $1.78 per share, suggesting 2.3% year-over-year growth.
Let’s see how things have shaped up prior to this announcement.
The rising impact of artificial intelligence (AI), 5G, internet of things, high-performance computing and the Cloud, and automotive is anticipated to have boosted demand for the company’s advanced solutions during the quarter under review. Synopsys’ performance is likely to have gained from growth in Custom Compiler, which is fueled by large deal wins in the 5G, AI and server chip markets.
Synopsys’ fiscal third-quarter performance is likely to have benefited from growing demand for its solid product portfolio. Increasing global design activity and customer engagements are likely to have been growth drivers.
Also, the ongoing shift to high-performance cloud computing owing to the pandemic-induced remote working environment is expected to have aided demand for the company’s Intellectual Property (IP) solutions, such as PCI Express, 112G Ethernet and DDR.
Additionally, widespread contract wins and the increasing deployment of the Fusion Platform, including Fusion Compiler, are anticipated to have been key growth drivers. Synopsys’ Verification Continuum platform witnesses robust demand and competitive gains, which are likely to have been major catalysts as well.
Further, the company’s USB4 IP solution for advanced 5nm processes is likely to have stoked order growth in the to-be-reported quarter. Also, strong adoption of its interface and foundation IP solutions is expected to have boosted revenues for the company’s interface portfolio.
Moreover, Synopsys’s partnerships with industry leaders like Microsoft (MSFT - Free Report) and Taiwan Semiconductor Manufacturing Company are expected to have accelerated the deployment of its cloud solutions, thereby aiding the company’s top line during the quarter under review.
The company’s solid electronic design automation (EDA) software partner base, which includes Advanced Micro Devices, Juniper Networks, Realtek, Toshiba and Wolfson, is likely to have served as a major revenue driver.
Increased design investments in Synopsys’s ARC processors by automotive companies, despite the pandemic-induced headwinds in the automotive space, are positives.However, partial resumption of normal activities is expected to have brought back certain expenditures, which were on hold during the lockdown and work-from-home period. This might have been a slight drag on margins.
Component supply constraints are also expected to have partially offset the benefits of the aforementioned factors. Apart from this, heightening competition from the likes of Cadence Design Systems might have played spoilsport.
Besides, geopolitical challenges, coupled with uncertainties related to restrictions over trade with Huawei Technologies, might have adversely impacted overall business during the fiscal third quarter.
What Our Model Says
Our proven model does not predict an earnings beat for Synopsys this time around. The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.
Synopsys currently carries a Zacks Rank of 3 and has an Earnings ESP of 0.00%.
Stocks With Favorable Combinations
Here are some companies, which, per our model, have the right combination of elements to post an earnings beat in their upcoming releases:
Chewy Inc. (CHWY - Free Report) has an Earnings ESP of +20.00% and currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
AutoZone (AZO - Free Report) has an Earnings ESP of +9.54% and carries a Zacks Rank #2, at present.
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Synopsys (SNPS) to Report Q3 Earnings: What's in Store?
Synopsys (SNPS - Free Report) is slated to release third-quarter fiscal 2021 results on Aug 18.
Management expects third-quarter revenues between $1.03 billion and $1.06 billion. The Zacks Consensus Estimate for the top line is currently pegged at $1.04 billion, indicating 8.3% year-on-year growth.
Management expects non-GAAP earnings between $1.75 and $1.80 per share. Notably, the consensus mark for earnings is pegged at $1.78 per share, suggesting 2.3% year-over-year growth.
Let’s see how things have shaped up prior to this announcement.
Synopsys, Inc. Price and EPS Surprise
Synopsys, Inc. price-eps-surprise | Synopsys, Inc. Quote
Factors at Play
The rising impact of artificial intelligence (AI), 5G, internet of things, high-performance computing and the Cloud, and automotive is anticipated to have boosted demand for the company’s advanced solutions during the quarter under review. Synopsys’ performance is likely to have gained from growth in Custom Compiler, which is fueled by large deal wins in the 5G, AI and server chip markets.
Synopsys’ fiscal third-quarter performance is likely to have benefited from growing demand for its solid product portfolio. Increasing global design activity and customer engagements are likely to have been growth drivers.
Also, the ongoing shift to high-performance cloud computing owing to the pandemic-induced remote working environment is expected to have aided demand for the company’s Intellectual Property (IP) solutions, such as PCI Express, 112G Ethernet and DDR.
Additionally, widespread contract wins and the increasing deployment of the Fusion Platform, including Fusion Compiler, are anticipated to have been key growth drivers. Synopsys’ Verification Continuum platform witnesses robust demand and competitive gains, which are likely to have been major catalysts as well.
Further, the company’s USB4 IP solution for advanced 5nm processes is likely to have stoked order growth in the to-be-reported quarter. Also, strong adoption of its interface and foundation IP solutions is expected to have boosted revenues for the company’s interface portfolio.
Moreover, Synopsys’s partnerships with industry leaders like Microsoft (MSFT - Free Report) and Taiwan Semiconductor Manufacturing Company are expected to have accelerated the deployment of its cloud solutions, thereby aiding the company’s top line during the quarter under review.
The company’s solid electronic design automation (EDA) software partner base, which includes Advanced Micro Devices, Juniper Networks, Realtek, Toshiba and Wolfson, is likely to have served as a major revenue driver.
Increased design investments in Synopsys’s ARC processors by automotive companies, despite the pandemic-induced headwinds in the automotive space, are positives.However, partial resumption of normal activities is expected to have brought back certain expenditures, which were on hold during the lockdown and work-from-home period. This might have been a slight drag on margins.
Component supply constraints are also expected to have partially offset the benefits of the aforementioned factors. Apart from this, heightening competition from the likes of Cadence Design Systems might have played spoilsport.
Besides, geopolitical challenges, coupled with uncertainties related to restrictions over trade with Huawei Technologies, might have adversely impacted overall business during the fiscal third quarter.
What Our Model Says
Our proven model does not predict an earnings beat for Synopsys this time around. The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.
Synopsys currently carries a Zacks Rank of 3 and has an Earnings ESP of 0.00%.
Stocks With Favorable Combinations
Here are some companies, which, per our model, have the right combination of elements to post an earnings beat in their upcoming releases:
Chewy Inc. (CHWY - Free Report) has an Earnings ESP of +20.00% and currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
AutoZone (AZO - Free Report) has an Earnings ESP of +9.54% and carries a Zacks Rank #2, at present.