NEW YORK, July 25, 2026, 17:08 EDT — U.S. trading has ended for the day.
- Shares of Synopsys dropped 2.8% over the past week, closing at $373.47. The Nasdaq declined 2.0%.
- The agency revised its ratings outlook to positive. S&P projects leverage to decrease to 1.8 times this year.
- Initial guided P/E stands at 25.3, compared with Cadence Design Systems NASDAQ:CDNS at 41.3.
Shares of Synopsys ended Friday at $373.47, little moved for the day. The closing price was just 2.0% higher than its $366 low for the year.
S&P Global Ratings, a division of S&P Global NYSE:SPGI, raised its outlook to positive from stable on Thursday, while maintaining its BBB rating.
The two indicators move in different directions. Credit risk is declining. Equity investors continue to be cautious about organic growth.
S&P reported that adjusted leverage has decreased to 2.3 times. The agency anticipates this figure will reach 1.8 times in fiscal 2026 and 1.2 times by 2027. A credit rating upgrade may occur in the next 12 to 24 months.
Synopsys has returned $4.3 billion of the $14.3 billion it borrowed for Ansys. Nvidia NASDAQ:NVDA contributed $2 billion, which supported further debt repayment.
However, Synopsys shares declined 2.8% across five sessions. The Nasdaq fell 2.0%, with chip stocks retreating on Friday.
At Friday’s close, Synopsys shares were down 42.7% from their 52-week peak. Cadence finished 21.7% under its highest point over the past year.
An initial analysis based on guidance highlights the valuation division. The assessment relies on the midpoint of current-year non-GAAP EPS, rather than reported GAAP earnings.
| Metric | Synopsys | Cadence |
|---|---|---|
| July 24 closing price | $373.47 | $326.24 |
| Change over week | -2.8% | -1.2% |
| 2026 midpoint for non-GAAP EPS | $14.76 | $7.90 |
| Price to estimated EPS | 25.3x | 41.3x |
| Synopsys relative discount | 38.7% | — |
| Difference from 52-week peak | -42.7% | -21.7% |
| Upcoming earnings release | Aug. 26 | July 27 |
Prices reflect closing values from July 24. The guidance is sourced from the most recently released forecasts by the companies.
This puts Synopsys at roughly a 39% discount based on projected earnings. Fiscal calendars vary, so the comparison is indicative.
S&P cited one justification for the lower valuation, pointing to recent pro-forma revenue growth of less than 6% and EDA growth of 8%. According to the agency, historical EDA growth was above 10%.
Synopsys reported a 42% increase in second-quarter revenue to $2.276 billion, driven by its Ansys unit. Adjusted earnings per share declined to $3.35 from $3.67 the previous year.
Management increased full-year revenue guidance to a range of $9.625 billion to $9.705 billion. The company also raised its adjusted EPS outlook to between $14.72 and $14.80. CEO Sassine Ghazi said AI was “driving demand across our portfolio.” Synopsys Investor Relations
The next peer review is due Monday. Cadence will post results after markets close at 2 p.m. Pacific. The company’s previous forecast projected revenue between $1.555 billion and $1.595 billion and adjusted earnings per share of $2.02 to $2.08.
Synopsys is set to release July-quarter earnings on August 26, with its investor day scheduled for September 30 in New York.
Risks: Synopsys’ outlook is based on the assumption that there will be no additional export-control modifications. Potential challenges such as tighter China regulations, soft Design IP results or a longer-than-expected timeline for Ansys integration may slow both growth and efforts to reduce debt.
Currently, the balance sheet is strengthening at a quicker pace than the share price. Monday’s Cadence report will reveal if this difference is unique to the company or reflects a broader sector trend.
