Synopsys Inc. received an upgrade to Outperform from Baird on Tuesday, with the brokerage raising its price target to $560 from $558 as the semiconductor software provider benefits from rising chip-design demand and AI integration.
The stock was trading at $410 on Aug. 26, the day of the upgrade. Baird’s new target implies a multiple of 25 times expected earnings, while the firm also increased its fiscal 2027 adjusted earnings-per-share estimate to $18.15 from $17.52. The brokerage’s outlook reflects confidence in Synopsys’ ability to sustain growth amid expanding AI-driven workflows.
Third-quarter results released by Synopsys showed revenue climbing 40% year-over-year to approximately $2.48 billion, surpassing Baird’s estimate by about 2%. Electronic Design Automation revenue increased 8%, while Design IP revenue rose 11%. Operating margins expanded to 42%, up from 39% a year earlier and exceeding the 40% consensus estimate.
For fiscal 2026, Baird projects revenue growth of 38% and adjusted EPS growth of 17%, with EBIT margins seen at 41.5%. Free cash flow is forecast to reach $2.6 billion, $600 million above the brokerage’s prior estimate. Synopsys also highlighted roughly 30 agentic AI engagements in engineering workflows and holds over half of the interface IP market.
Baird’s upgraded rating and revised targets follow Synopsys’ third-quarter earnings release. The company is scheduled to host an investor day on Sept. 30 to outline further details on its growth strategy, including EDA, Design IP, and Ansys integration.
