Synopsys Inc. SNPS continues with its acquisition spree. The company declared that it has acquired certain assets of Forcheck b.v., a privately held software company in the Netherlands. However, the financial terms of the deal have not been disclosed.
Forcheck offers static code analysis tools in Fortran applications that meet the industry coding standards and compliances. These improve code quality while reducing security vulnerabilities. Therefore, the integration of Forcheck technology will enable the company to enhance its static code analysis solution capabilities. This in turn will provide support to its Software Integrity Platform in Fortran programming language.
Synopsys’ Software Integrity Platform provides a complete suite of software security testing solutions for software signoff. The platform enables organizations to detect and fix “critical security vulnerabilities throughout the software development lifecycle and supply chain” quickly, thereby reducing overall risks, costs and time.
Currently, Synopsys provides static code analysis solutions under the Coverity product suite. The recent acquisition will improve Coverity's analysis capabilities while enhancing security and quality.
Furthermore, Synopsys in its press release revealed that “The acquisition of Forcheck technology provides Synopsys with unique capabilities and extends the utility of the Software Integrity Platform for organizations developing and maintaining critical infrastructure systems written in Fortan."
Therefore, we believe that Forcheck will enable Synopsys to offer a more comprehensive portfolio of software solutions. Moreover, through the acquisition, Synopsys will gain Forcheck customers, which will ultimately boost the top line.
The recent acquisition is in line with Synopsys’ continued investments toward enhancing the software security product portfolio. We believe that the acquisition will enhance its presence in this market while expanding the product portfolio and quality of its wholly owned subsidiary, Coverity.
Further, Synopsys’ stock price history reveals that the company hasn’t disappointed in a long time. In fact, over the last one year, shares of Synopsys have risen 44.2%, outperforming the Zacks Categorized Computer-Software industry, which has showcased an increase of just 18.1%.
Synopsys sells electronic design automation (EDA) software to the semiconductor and electronics industries. In the current economic scenario, customers are strengthening supplier relationships and focusing on cost efficiencies, which have led to higher adoption of Synopsys’ products.
We believe that the company’s sustained focus on product launches, acquisitions and deal wins will aid results, going ahead. Apart from this, unique intellectual properties and global support provided by the company will drive results. Additionally, the company’s acquisitions will expand its reach in the software quality, testing and security tools market.
However, competition from Cadence Design Systems Inc. CDNS and Mentor Graphics Corp. MENT coupled with a challenging technology spending environment and uncertainty regarding the exact time of realizing acquisition synergies keep us on the sidelines.
Currently, Synopsys has a Zacks Rank #3 (Hold). A better-ranked stock in the technology sector is NVIDIA Corporation NVDA, which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here
NVIDIA has a long-term earnings per share growth rate of 10.3%.
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