A Beat And Raise Quarter For Synopsys

DA Davidson reiterated its Buy rating on Synopsys, Inc. SNPS and lifted the price target to $64 from $60, based on their 18x CY2017 EPS plus net cash.

The analysts also increased their FY2016 EPS estimate to $3.02 from $3.00 and maintained the FY2017 EPS of $3.20, following a strong Q3 results announcement and Q4 favorable outlook provided by Synopsys.

The company reported Q3 revenues of $615.2 million (up 11 percent year-over-year) and pro-forma EPS of $0.76, beating the Street mean of $603 million and $0.74, respectively. According to the analysts, the strength in the quarter was across the board, core EDA remains robust driven by elevated design activity and chip complexity, and the hardware business (emulation etc.) continues to outpace the industry.

The company's Q4 outlook also exceeds the Street. The revenues for Q4 are estimated to stand at $621-$636 million (up 7 percent year-over-year at the midpoint) and pro-forma EPS at $0.75-$0.78.