BNP Paribas upgrades Synopsys to Neutral with a $420 target

BNP Paribas analyst Andrew DeGasperi upgraded Synopsys to Neutral from Underperform and set a price target of $420. The decision reflects moderating risks around artificial intelligence disruption, alongside improving conditions related to Intel and China.

Synopsys is developing an AI-driven electronic design automation environment and agentic capabilities alongside Microsoft and Advanced Micro Devices. Early evaluations showed these autonomous workflows reduced design cycle times by approximately 25% to 40%.

The company's Design IP segment returned to year-over-year growth in the third quarter of fiscal 2026. Total revenue for the quarter rose to $2.477 billion from $1.740 billion a year earlier, driven by strong results in Design Automation. Management subsequently raised its full-year fiscal 2026 revenue guidance to approximately $9.715 billion at the midpoint.

The acquisition of Ansys also plays a central role in Synopsys' performance. Management expects approximately $2.98 billion in revenue from Ansys in fiscal 2026, targeting $400 million in cumulative annual synergies by the fourth year post-transaction.

Risks remain tied to Chinese export controls, potential Ansys integration delays, and long-term AI disruption. Short interest rose to about 5.71 million shares as of August 31, compared with 4.36 million shares as of July 31, representing approximately 2.98% of shares outstanding.