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Synopsys (SNPS) to Report Q1 Earnings: What's in the Offing?

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Synopsys, Inc. SNPS is slated to release first-quarter fiscal 2020 results on Feb 19.

For the fiscal first quarter, the company estimates revenues in the $805-$835 million band. The Zacks Consensus Estimate for the metric is pegged at $822.3 million, indicating growth of 0.23% from the year-ago quarter reported figure.

Management expects non-GAAP earnings per share between 89 cents and 94 cents. The Zacks Consensus Estimate for the same stands at 92 cents, implying a drop of 14.8% from the prior-year reported number.

The company’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the beat being 6.7%, on average.

Synopsys, Inc. Price and EPS Surprise

Synopsys, Inc. Price and EPS Surprise

Synopsys, Inc. price-eps-surprise | Synopsys, Inc. Quote

Let’s see, how things have shaped up for this announcement.

Factors at Play

Synopsys’ fiscal first-quarter performance is likely to have benefited from growing demand for its strong product portfolio. Increasing global design activity and customer engagements is likely to have remained a tailwind. Rising impact of “AI, Automotive, 5G, IoT, Cloud and the proliferation of Smart Everything” is likely to have boosted demand for the company’s advanced solutions.

Widespread contract wins and growing deployment of Fusion Platform, including Fusion Compiler, are anticipated to have been key drivers.

Additionally, the company’s 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.

Moreover, Synopsys’ Verification Continuum platform steadily witnesses excellent demand and competitive gains and is anticipated to have been a major catalyst as well.

However, with hardware and IP revenues tilted toward the second half, fiscal first-quarter results might be adversely impacted.

Moreover, a rising competition from the likes of Cadence Design Systems is likely to have remained a concern.

What Our Model Says

Our proven Zacks model does not predict an earnings beat for Synopsys this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. 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 has a Zacks Rank #3 and an Earnings ESP of 0.00%.

Stocks to Consider

Here are some stocks worth considering as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:

Broadcom Inc. AVGO has an Earnings ESP of +1.72% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Anterix (ATEX - Free Report) has an Earnings ESP of +3.57% and is Zacks #3 Ranked.

Applied Optoelectronics, Inc. AAOI has an Earnings ESP of +8.12% and is Zacks #3 Ranked.

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