Synopsys SNPS is scheduled to report first-quarter fiscal 2025 results on Feb. 26, after market close.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Synopsys expects non-GAAP earnings per share between $2.77 and $2.82. The Zacks Consensus Estimate for fiscal first-quarter earnings is pinned at $2.81 per share, which indicates a year-over-year decline of 21%.

The company anticipates revenues between $1.435 billion and $1.465 billion for the fiscal first quarter. The Zacks Consensus Estimate is pegged at $1.45 billion, which suggests a decline of 11.9% from the year-ago period's reported figure.

In the trailing four quarters, SNPS’ earnings surpassed the Zacks Consensus Estimate thrice while missing the same on one occasion, with an average surprise of 2.68%.

Factors Influencing Synopsys’ Q1 Results

Synopsys’ fiscal first-quarter performance is likely to have benefited from the rising demand for its extensive product portfolio. The growing need for high-performance cloud computing, propelled by the evolving hybrid work environment, is expected to have boosted demand for the company's Intellectual Property (IP) solutions.

Increased adoption of Synopsys.ai among chip manufacturers and vendors is anticipated to have boosted top-line growth during the reported quarter. Additionally, the long-term collaboration with TSMC aimed to deliver advanced EDA and IP solutions on TSMC’s most advanced process and 3DFabric technologies to accelerate innovation for AI and multi-die designs is expected to have been a major positive.

The surge in global design activity and heightened user engagement are expected to have significantly driven SNPS’ performance in the fiscal first quarter. Growing adoption of its interface and foundation IP solutions, along with contract wins and the use of the Fusion Platform, including the Fusion Compiler, is anticipated to have positively impacted SNPS’ fiscal first-quarter performance.

The increasing use of AI, IoT, 5G and cloud technology is likely to have driven demand for Synopsys’ solutions in the to-be-reported quarter. Additionally, robust design investments in Synopsys’ ARC processors by automotive companies, as well as the strong adoption of security solutions for interfaces like CXL, PCI Express and DDR, are likely to aid its first-quarter results.

However, tightening budgets among corporations due to ongoing macroeconomic challenges and unfavorable currency exchange rates are expected to have partially offset the positive impacts of the growth drivers.

What Our Model Says About SNPS

Our proven model does not conclusively predict an earnings beat for SNPS this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.

Though SNPS currently carries a Zacks Rank #3, it has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With Favorable Combination

Marvell Technology MRVL, ODDITY ODD and IonQ IONQ are some stocks that have a favorable combination.

Marvell Technology has an Earnings ESP of +2.77% and a Zacks Rank #2 at present. MRVL shares have gained 51.3% in the trailing 12-month period. MRVL is set to report its fourth-quarter 2024 results on March 5. You can see the complete list of today’s Zacks #1 Rank stocks here.

ODDITY has an Earnings ESP of +4.00% and a Zacks Rank #3 at present. ODD shares have rallied 9.9% in the trailing 12-month period. ODD is slated to report its fourth-quarter 2024 results on Feb. 25.

IonQ has an Earnings ESP of +35.14% and a Zacks Rank #3 at present. IONQ shares have gained 182.4% in the trailing 12-month period. IONQ is scheduled to report its fourth-quarter 2024 results on Feb. 26.

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This article originally published on Zacks Investment Research (zacks.com).

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