The investment case for Synopsys presents a study in contrasts as the new week begins. While the company’s latest quarterly performance exceeded market expectations and triggered a notable shift in analyst sentiment, a looming legal deadline serves as a reminder of persistent risks overshadowing its operational success.
Robust Quarterly Performance and Revised Outlook
Synopsys delivered a powerful financial argument in its recent fourth-quarter report. Revenue surged approximately 38% to $2.255 billion, a jump significantly fueled by the integration of Ansys. Looking further ahead, management has provided confident revenue guidance of about $9.61 billion for the 2026 fiscal year.
This optimism found a strong echo among market researchers. Analysts at Bank of America executed a remarkably swift reassessment of the stock. Within a mere three-day period, they upgraded their rating in two steps, moving directly from “Underperform” to “Buy,” while also raising their price target substantially. They cited the robust growth from the Ansys division and a perceived reduction of risk in the company’s China operations as key drivers for their change in view. Other firms, including JPMorgan and Needham, followed by increasing their own price targets.
Should investors sell immediately? Or is it worth buying Synopsys?
A Critical December Deadline for Investors
Despite this fundamental strength, the company continues to deal with the legal aftermath of a severe stock decline in September 2025. On that day, shares plummeted nearly 36% following a report of declining revenue in the Design IP segment. Allegations that management had made misleading statements regarding the stability of this business unit resulted in the filing of a class-action lawsuit.
A critical procedural milestone is now approaching. Investors have until December 30, 2025, to step forward as lead plaintiffs in the case. This deadline adds a layer of uncertainty. While some institutional investors, such as CCLA Investment Management, used the price drop as a buying opportunity—contributing to an 18% gain for the stock over a 30-day period—the full scope of potential legal liabilities may only become clearer after this date passes.
The market’s focus is shifting to whether Synopsys can execute its projected growth roadmap for 2026 without further disruption. The expiration of the lawsuit filing deadline on December 30th represents the next short-term milestone likely to influence the share price trajectory.
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