SNPS Should I Buy
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Synopsys Inc (SNPS) is not a strong buy at the moment for a beginner investor with a long-term strategy. While there are positive signals such as recent congressional purchases and favorable analyst sentiment, the technical indicators are bearish, and the company's financial performance in the latest quarter shows significant declines in net income, EPS, and gross margin. The options data indicates mixed sentiment, and the stock is currently trading below key support levels. Given the user's impatience and unwillingness to wait for optimal entry points, holding off on purchasing this stock until clearer positive trends emerge is advisable.
The technical indicators for SNPS are bearish. The MACD histogram is negative and contracting, RSI is neutral at 30.563, and moving averages show a bearish trend (SMA_200 > SMA_20 > SMA_5). The stock is trading below the pivot level of 438.185, with key support at 411.636 and resistance at 464.734. Pre-market price is $421.55, down 0.44%, indicating weakness.
Analysts have raised price targets, with several maintaining Buy or Overweight ratings.
Congress members have made recent purchase transactions, indicating confidence in the stock.
The company has a solid backlog of $11.4B and a better-than-expected FY26 EPS outlook.
Hedge funds are selling, with a 427.09% increase in selling activity last quarter.
The latest quarter financials show a significant decline in net income (-59.73% YoY), EPS (-66.48% YoY), and gross margin (-16.63% YoY).
The stock has a 50% chance to decline by -12.37% over the next month based on historical trends.
In Q4 2025, Synopsys reported a revenue increase of 37.83% YoY to $2.25B. However, net income dropped by 59.73% YoY to $448.7M, EPS declined by 66.48% YoY to $2.39, and gross margin fell by 16.63% to 64.05%. These declines indicate challenges in profitability despite revenue growth.
Analysts are generally positive on SNPS, with multiple firms raising price targets and maintaining Buy or Overweight ratings. KeyBanc and JPMorgan highlighted better-than-expected FY26 EPS guidance and solid backlog. However, Piper Sandler noted concerns about organic EDA growth and free cash flow margins.
