Synopsys Shares Plunge 7% on Disappointing Guidance Despite Strong Q4 Results

Synopsys (NASDAQ:SNPS) saw its stock drop over 7% in pre-market today after issuing weaker-than-expected guidance for the first quarter and fiscal year, overshadowing its solid fourth-quarter performance.

For Q4, Synopsys reported adjusted earnings per share of $3.40 on revenue of $1.64 billion, surpassing analyst expectations of $3.30 and $1.63 billion, respectively. Despite beating estimates, the outlook for the coming periods tempered investor enthusiasm.

For the first quarter, Synopsys projected adjusted EPS between $2.77 and $2.82, with revenue expected to range from $1.44 billion to $1.47 billion. This guidance fell short of analyst estimates, which anticipated EPS of $3.52 and revenue of $1.64 billion.

The company’s full-year forecast also disappointed. Synopsys predicted adjusted EPS in the range of $14.88 to $14.96 on revenue between $6.75 billion and $6.81 billion, below the Street consensus estimates of $14.89 in EPS and $6.91 billion in revenue.

Analysts from Morgan Stanley expressed concerns over the weaker guidance, noting that it marked a break from the positive momentum seen recently in Synopsys’ core EDA (Electronic Design Automation) business. They suggested that the disappointing outlook might dampen investor interest, especially following recent strength in the semiconductor sector.