SNPS – Market expectations are for Uniform ROA to reach new peaks, but management may have concerns about growth, products, and supply chain disruptions

February 15, 2022

  • Synopsys, Inc. (SNPS) currently trades at a historical high and above corporate averages relative to Uniform earnings, with a 41.6x Uniform P/E (Fwd. V/E’).
  • At these levels, markets are pricing in expectations for Uniform ROA to reach new peaks, accompanied by 5% Uniform asset growth.
  • Meanwhile, analysts expect Uniform ROA to remain at 24% levels through 2023, accompanied by 7% Uniform asset growth.
  • If sustained going forward, these levels would imply a stock price closer to $216, representing approximately 30% equity downside for the firm.
  • Moreover, the firm’s most recent earnings call suggests management may have concerns about growth, products, and supply chain disruptions.

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