We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is Synopsys (SNPS) Worth Buying in a Highly Volatile Market?
Read MoreHide Full Article
Adding Synopsys (SNPS - Free Report) to your portfolio seems a wise idea amid the current macroeconomic and geopolitical uncertainties, given the strength of its fundamentals and solid prospects.
Since the beginning of 2022, the U.S. equity market has been witnessing severe volatility due to the increasing crude oil prices and rising inflation concerns. The ongoing Russia-Ukraine war further increased worries for investors about the global economic recovery.
The aforementioned factors have led to a massive sell-off in the stock market, with the Dow Jones Industrial Average, Nasdaq Composite and S&P 500 indexes plunging 5.3%, 14.8% and 7.9%, respectively, on a year-to-date basis.
The aforementioned global macroeconomic and geopolitical uncertainties are likely to continue weighing on investors’ sentiments, which can result in more volatility in the U.S. equity market.
However, this volatility has created buying opportunities for investors. In the current scenario, investors can look for stocks with strong fundamentals, such as Synopsys, that can stay afloat and grow once the impact of the aforementioned uncertainties cools off.
Amid the ongoing economic and financial instability, it is prudent to pick solid growth companies as these are financially stable, accruing profits in established markets. These stocks with their solid fundamentals allow investors to hedge their funds from any economic downturn.
Apart from having solid fundamentals, SNPS has the favorable combination of a Growth Score of B and a Zacks Rank #2 (Buy).
Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 (Strong Buy) or #2 and a Growth Score of A or B offer solid investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.
Synopsys has an impressive earnings surprise history. The company outpaced estimates in all t he trailing four quarters, delivering an average earnings surprise of 5%. Additionally, the stock has impressive growth expectations. The long-term earnings per share growth rate is estimated at 16.2%.
Analysts have raised estimates for fiscal 2022 and fiscal 2023 over the past 30 days, reflecting their confidence in the company. During the same period, the Zacks Consensus Estimate for fiscal 2022 and 2023 earnings has moved north by 2 cents and 4 cents, respectively.
The Zacks Consensus Estimate of $7.90 per share for fiscal 2022 earnings suggests growth of approximately 15.5% from the year-ago period. For fiscal 2023, the consensus mark for earnings is pegged at $9.17, indicating a year-over-year increase of 16.1%.
Fundamental Growth Drivers
Synopsys is benefiting from strong design wins due to a robust product portfolio. The growth in the work-and-learn-from-home trend is driving demand for bandwidth. Moreover, the strong traction for Synopsys’ Fusion Compiler product boosted the top line. The growing demand for advanced technology, design, IP and security solutions is also creating solid prospects.
The emerging clout of AI, 5G and advanced driver-assistance systems chip-set making is fueling demand for computational software tools, which favors Synopsys’ prospects. Given the company’s capability to cater to the growing complex design requirements of customers, we believe SNPS is well-poised to capitalize on this opportunity.
Furthermore, the company’s latest collaboration with Juniper Networks (JNPR - Free Report) to form a separate entity to provide an open silicon photonics platform is likely to open new avenues of growth for Synopsys.
Silicon Photonics is currently an evolving technology under which data is transferred through optical rays among computer chips, which can carry far more data at a faster speed than conventional electronic circuits. Also, silicon photonics consumes less power and generates less heat than electrical conductors. Therefore, it is more energy-efficient and cost-effective.
The silicon photonics market is witnessing significant growth for the past few years, mainly driven by the increased demand for high bandwidth and high data transfer capabilities. The pandemic-led work-and-learn-from-home trend also spurred the necessity for high speed and data transfer capabilities, thereby driving demand for silicon photonics. An increase in the deployment of the 5G network is anticipated to further boost silicon photonics’ demand.
According to the Markets and Markets report, the silicon photonics market is anticipated to increase at a CAGR of 26.8% and reach $4.6 billion by 2027 from $1.1 billion in 2021. Another market research firm, Vantage Market Research, forecasts that the silicon photonics market will increase to $3.59 billion by 2028 from $1.08 billion in 2021, representing a CAGR of 25.8%.
Therefore, by forming a separate photonics company, Synopsys and Juniper Networks are trying to tap the rapidly growing opportunities in the silicon photonics market.
Other Stocks to Consider
Some other top-ranked stocks from the broader technology sector include Jabil (JBL - Free Report) and Broadcom (AVGO - Free Report) . While Jabil sports a Zacks Rank #1, Broadcom carries a Zacks Rank #2.
The Zacks Consensus Estimate for Jabil’s third-quarter fiscal 2022 earnings has been revised upward to $1.62 per share from $1.46 30 days ago. For fiscal 2022, earnings estimates have been revised upward by 67 cents to $7.25 per share in the past 30 days.
Jabil’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 13.5%. Shares of JBL have rallied 5.9% in the trailing 12 months.
The Zacks Consensus Estimate for Broadcom’s second-quarter fiscal 2022 earnings has been revised upward by eight cents to $8.72 per share over the past seven days. For fiscal 2022, earnings estimates have moved upward by 182 cents to $35.67 per share over the past seven days.
Broadcom’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 1.9%. Shares of AVGO have rallied 26.9% over the past year.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Shutterstock
Is Synopsys (SNPS) Worth Buying in a Highly Volatile Market?
Adding Synopsys (SNPS - Free Report) to your portfolio seems a wise idea amid the current macroeconomic and geopolitical uncertainties, given the strength of its fundamentals and solid prospects.
Since the beginning of 2022, the U.S. equity market has been witnessing severe volatility due to the increasing crude oil prices and rising inflation concerns. The ongoing Russia-Ukraine war further increased worries for investors about the global economic recovery.
The aforementioned factors have led to a massive sell-off in the stock market, with the Dow Jones Industrial Average, Nasdaq Composite and S&P 500 indexes plunging 5.3%, 14.8% and 7.9%, respectively, on a year-to-date basis.
The aforementioned global macroeconomic and geopolitical uncertainties are likely to continue weighing on investors’ sentiments, which can result in more volatility in the U.S. equity market.
However, this volatility has created buying opportunities for investors. In the current scenario, investors can look for stocks with strong fundamentals, such as Synopsys, that can stay afloat and grow once the impact of the aforementioned uncertainties cools off.
Synopsys, Inc. Price and Consensus
Synopsys, Inc. price-consensus-chart | Synopsys, Inc. Quote
Why Should One Bet on Synopsys?
Amid the ongoing economic and financial instability, it is prudent to pick solid growth companies as these are financially stable, accruing profits in established markets. These stocks with their solid fundamentals allow investors to hedge their funds from any economic downturn.
Apart from having solid fundamentals, SNPS has the favorable combination of a Growth Score of B and a Zacks Rank #2 (Buy).
Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 (Strong Buy) or #2 and a Growth Score of A or B offer solid investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.
Synopsys has an impressive earnings surprise history. The company outpaced estimates in all t he trailing four quarters, delivering an average earnings surprise of 5%. Additionally, the stock has impressive growth expectations. The long-term earnings per share growth rate is estimated at 16.2%.
Analysts have raised estimates for fiscal 2022 and fiscal 2023 over the past 30 days, reflecting their confidence in the company. During the same period, the Zacks Consensus Estimate for fiscal 2022 and 2023 earnings has moved north by 2 cents and 4 cents, respectively.
The Zacks Consensus Estimate of $7.90 per share for fiscal 2022 earnings suggests growth of approximately 15.5% from the year-ago period. For fiscal 2023, the consensus mark for earnings is pegged at $9.17, indicating a year-over-year increase of 16.1%.
Fundamental Growth Drivers
Synopsys is benefiting from strong design wins due to a robust product portfolio. The growth in the work-and-learn-from-home trend is driving demand for bandwidth. Moreover, the strong traction for Synopsys’ Fusion Compiler product boosted the top line. The growing demand for advanced technology, design, IP and security solutions is also creating solid prospects.
The emerging clout of AI, 5G and advanced driver-assistance systems chip-set making is fueling demand for computational software tools, which favors Synopsys’ prospects. Given the company’s capability to cater to the growing complex design requirements of customers, we believe SNPS is well-poised to capitalize on this opportunity.
Furthermore, the company’s latest collaboration with Juniper Networks (JNPR - Free Report) to form a separate entity to provide an open silicon photonics platform is likely to open new avenues of growth for Synopsys.
Silicon Photonics is currently an evolving technology under which data is transferred through optical rays among computer chips, which can carry far more data at a faster speed than conventional electronic circuits. Also, silicon photonics consumes less power and generates less heat than electrical conductors. Therefore, it is more energy-efficient and cost-effective.
The silicon photonics market is witnessing significant growth for the past few years, mainly driven by the increased demand for high bandwidth and high data transfer capabilities. The pandemic-led work-and-learn-from-home trend also spurred the necessity for high speed and data transfer capabilities, thereby driving demand for silicon photonics. An increase in the deployment of the 5G network is anticipated to further boost silicon photonics’ demand.
According to the Markets and Markets report, the silicon photonics market is anticipated to increase at a CAGR of 26.8% and reach $4.6 billion by 2027 from $1.1 billion in 2021. Another market research firm, Vantage Market Research, forecasts that the silicon photonics market will increase to $3.59 billion by 2028 from $1.08 billion in 2021, representing a CAGR of 25.8%.
Therefore, by forming a separate photonics company, Synopsys and Juniper Networks are trying to tap the rapidly growing opportunities in the silicon photonics market.
Other Stocks to Consider
Some other top-ranked stocks from the broader technology sector include Jabil (JBL - Free Report) and Broadcom (AVGO - Free Report) . While Jabil sports a Zacks Rank #1, Broadcom carries a Zacks Rank #2.
The Zacks Consensus Estimate for Jabil’s third-quarter fiscal 2022 earnings has been revised upward to $1.62 per share from $1.46 30 days ago. For fiscal 2022, earnings estimates have been revised upward by 67 cents to $7.25 per share in the past 30 days.
Jabil’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 13.5%. Shares of JBL have rallied 5.9% in the trailing 12 months.
The Zacks Consensus Estimate for Broadcom’s second-quarter fiscal 2022 earnings has been revised upward by eight cents to $8.72 per share over the past seven days. For fiscal 2022, earnings estimates have moved upward by 182 cents to $35.67 per share over the past seven days.
Broadcom’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 1.9%. Shares of AVGO have rallied 26.9% over the past year.