SNPS
Synopsys, Inc.
$439.54
Platform & Compounding FCF
80%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 156.3% above fair value
You pay
$439.54
Bear
$33.12
Fair
$171.52
Bull
$321.44
Bear
$33.12
-92.5%
8% stage 1 growth, 11% discount
Fair
$171.52
-61.0%
14% stage 1 growth, 11% discount
Bull
$321.44
-26.9%
18% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (14% base case)
Terminal Value % of EV
42%
Implied Market Multiple
140.6x
Market is pricing in (growth)
35.1%
vs 13.9% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $557.00 from 29 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $171.52 per share.
Warnings
Stock-based employee pay equals 67% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Wall Street's average price target is $557.00 (from 29 analysts). Our estimate is 92% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions