Synopsys, Inc. (SNPS) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Synopsys, Inc. (SNPS)

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Intrinsic Value (DCF)

Current$533.42

→

Intrinsic$137.25

-74%

$68.77$137.25$273.50

Growth 14%

Discount 10%

Terminal 3%

Current price reflects execution expectations above 14% growth — not unreasonable for quality businesses.

Range: Bear $69 → Bull $274. Current price implies expectations above the base case, closer to bull expectations.

Current price reflects assumptions at the upper end of our valuation range (bull case: $274).

Discount ↓Growth →	10%	12%	14%	16%
8%	$187	$210	$234	$260
10%	$106	$121	$137	$154
12%	$63	$74	$86	$99
14%	$37	$46	$55	$65

Bull Case

Bull case ($274) with 17% growth, 8% discount rate
Conservative 14% growth assumption is achievable based on track record

Bear Case

Bear case ($69) implies 87% downside at 11% growth, 12% discount
Trading 74% above base case — execution must exceed assumptions to justify
Price exceeds bull case ($274) — requires exceptional execution

Intrinsic Value vs Current Price

5-Year Cash Flow Projection

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5-Year Free Cash Flow Projection

Year 1$1.54B

Year 2$1.75B

Year 3$1.99B

Year 4$2.27B

Year 5$2.58B

Terminal$40.93B

📐 Model Inputs

Growth Rate13.9%5Y CAGR (cascade: 5Y→3Y→TTM)

Discount Rate9.5%WACC estimate

Terminal Growth3.0%Perpetuity rate

Base Free Cash Flow$1.35BTTM actual

Bear g×0.8, r+2%

Base Historical CAGR

Bull g×1.2, r−1.5%

ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

Frequently Asked Questions

Is SNPS stock undervalued or overvalued?

🔴 OVERVALUED

SNPS trades at $533.42 vs. our DCF-derived intrinsic value of $137.25, implying -73% downside. Using a 9.5% WACC and 13.9% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($234.94) suggests limited upside.

What is SNPS's intrinsic value?

Using a 5-year DCF model: Base FCF of $1.35B, projected at 13.9% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $11.41B net debt and dividing by 0.16B shares: Bear $70.02 | Base $137.25 | Bull $234.94. Current price $533.42 implies -73% to base case.

How is SNPS's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 13.9% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($33.60B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 24.9x.

Synopsys, Inc. (SNPS) Intrinsic Value