Morgan Stanley upgrades Synopsys to Overweight

Morgan Stanley upgraded Synopsys to Overweight while maintaining a $500 price target on the stock. Analyst Lee Simpson based the target on a forward price-to-earnings multiple of 30 to 35 times.

Simpson highlighted an attractive entry point following a recent valuation de-rating. He cited growing confidence in synergies from the Ansys acquisition, a recovery in design intellectual property, and an underappreciated growth opportunity in physical artificial intelligence.

The upgrade comes as the investment bank turns more selective across the broader semiconductor group. The firm's coverage universe gained roughly 70% during the year before pulling back about 60% from its June peaks.

Morgan Stanley adjusted other chip ratings alongside the move. It downgraded Infineon to Equal Weight and cut its target to €65 from €81. It lowered ASML's target to €1,700 from €1,930 while keeping an Overweight stance, and trimmed Besi's target to €220 from €260.