Key Takeaways
- Piper Sandler elevated Synopsys (SNPS) from Neutral to Overweight, increasing the price target from $450 to $550
- Growing optimism surrounding Intel’s 18A-P and 14A process nodes fuels the bullish call
- Industry sources suggest Apple and Google may leverage Intel’s foundry services, potentially increasing Synopsys IP demand
- The firm revised its FY2027 revenue projection to $10.8 billion and EPS forecast to $17.04
- Synopsys maintains a Zacks Rank #2 (Buy), as consensus EPS estimates have risen 3.7% to $14.75 in the past month
Piper Sandler issued an upgrade for Synopsys on Monday, elevating the stock to Overweight while increasing the price target to $550 from the previous $450 level. This revised target suggests approximately 18% upside potential from the stock’s recent trading level of $464.58.
The rationale behind this upgrade revolves around accelerating momentum within Intel’s foundry operations. According to Piper analyst Clarke Jeffries, market sentiment regarding Intel’s 18A-P and upcoming 14A manufacturing technologies has strengthened considerably in recent months. Since Synopsys provides critical design tools and intellectual property for cutting-edge semiconductor development, expanding foundry activity typically translates into direct business opportunities for the company.
The narrative becomes even more compelling when considering the reported customer base for Intel’s fabrication facilities. Industry reports suggest Apple may utilize Intel’s manufacturing capabilities for select upcoming chip designs. Additionally, Google has allegedly committed to Intel for approximately 50% of its TPU manufacturing requirements extending through 2028.
Should these partnerships materialize as anticipated, Piper projects they will generate substantial new IP licensing opportunities and design engagement — positioning Synopsys favorably to capitalize on this demand.
Intel’s Foundry Business as Growth Driver
Piper also highlighted that capacity limitations at cutting-edge semiconductor foundries have elevated the strategic importance of Intel’s developing manufacturing capabilities. Companies seeking alternatives to fully-booked fabrication facilities now have stronger incentives to seriously consider Intel’s offerings.
This shift could stimulate broader semiconductor design activity and generate additional opportunities for Synopsys across both its intellectual property and EDA tool portfolios.
From a financial perspective, Piper increased its FY2027 revenue projection to $10.8 billion from $10.7 billion. The firm’s FY2027 earnings per share estimate was raised to $17.04 from $16.69.
However, the firm acknowledged certain risk factors. The upgrade thesis relies significantly on the actual extent of customer commitments to Intel’s foundry services. Since Intel’s 14A process remains in development, near-term growth depends primarily on 18A-P adoption. Piper also noted intensifying competition in the EDA space, potential reductions in semiconductor R&D expenditures, and international trade restrictions as variables requiring monitoring.
Analyst Community Shows Strong Support
Synopsys currently commands an average brokerage recommendation score of 1.77 on a scale of 5, positioning it between Strong Buy and Buy ratings. Among the 22 analyst recommendations compiled, 14 rate the stock as Strong Buy while one assigns a Buy rating — representing 63.6% and 4.6% of total recommendations, respectively.
The Zacks Consensus Estimate for the current fiscal year has increased 3.7% during the past month, reaching $14.75 per share. This upward revision momentum has secured Synopsys a Zacks Rank #2 (Buy) designation.
According to Piper, activity related to Intel’s 18A-P node represents the most significant near-term catalyst, while wider adoption of Intel’s foundry services is anticipated to develop progressively over the longer term.
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