SG Cowen downgraded Synopsys (SNPS) to outperform from strong buy.
Analyst Raj Seth says he downgraded as the first quarter showed light bookings, and 2004 is looking back-end loaded. Seth says the company's announcement of its acquisition of Monolithic System Techonologies is quite expensive, and implies a big revenue multiple, which is dilutive to Synopsys.
Seth cut the $1.54 fiscal 2004 (Oct.) earnings per share estimate to $1.37, largely on higher costs associated with the acquisition. He says while expensive, the deal with Monolithic is strategically sound as the company has good technology. He remains optimistic about a pick-up in electronic design automation, which tends to be a late-cycle event.