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Is Synopsys Planning to Boost its Stock Price?

Synopsys, Inc. (Nasdaq: SNPS) has announced plans to repurchase about $200 million of its common stock in an accelerated share repurchase agreement (ASR) with Wells Fargo Bank, NA.

The software company develops electronic products and software applications in the electronic design automation (EDA) industry. Shares of SNPS are down 10.6% so far this year.

As per the agreed terms, the company will initially get 523,000 shares, with the remaining to settle by August 15, 2022. The numbers of shares repurchased will be based on the average of Synopsys’ daily volume-weighted average share prices during the repurchase period, less a discount.

Recent Results

Earlier in May, the company announced its second-quarter Fiscal 2022 results, which surpassed both earnings and revenue estimates.

Synopsys has also raised its guidance for the Fiscal Year 2022. It now expects revenues in the range of $5 billion to $5.05 billion, up from $4.78 billion to $4.83 billion projected earlier. Further, adjusted earnings are now projected to be between $8.63 and $8.70 per share, compared with the previous guidance of $7.85 and $7.92 per share.

Stock Rating

Recently, Rosenblatt Securities analyst Blair Abernethy maintained a Buy rating on Synopsys with a price target of $360, implying 11.5% upside potential from current levels.

Overall, the Street has a bullish outlook on the stock with a Strong Buy consensus rating based on six unanimous Buys. Synopsys’ average price target of $375.67 implies upside potential of about 16.3% from current levels.

Investors’ Sentiment

TipRanks’ Stock Investors tool shows that investors currently have a Positive stance on Synopsys, as 2% of investors on TipRanks increased their exposure to SNPS stock over the past 30 days.

Takeaway

Generally, companies enter ASRs to raise their valuation. Thus, the move may be considered as an effort by Synopsis to boost its share price. Further, the bullish sentiments of analysts, investors and bloggers keep us optimistic.

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