Why Synopsys Lagged Cadence (And Why It May Be Cheap)

Synopsys trades near $415 pricing in only ~9% growth, below its mid-teens revenue target, due to Ansys-merger debt and dilution.

• Underperformance vs peer: Synopsys and Cadence both lagged the SOXX since 2022, but Synopsys has trailed Cadence sharply over the last two years.
• Debt and dilution from Ansys: One year post-merger, Synopsys carries over $6B net debt (vs Cadence's ~$1B) and a higher share count after issuing stock to Ansys holders, leaving free cash flow per share flat.

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