) to underperform.
Analyst Mehdi Hosseini says the downgrade is based on valuation. He says results were at the low end of revised guidance; the company also cut first quarter guidance. Hosseini notes the company's customers are under economic pressure. He expects flat bookings. He also reduced his $3.27 fiscal 2003 (Oct.) earnings per share estimate to $3.10, accordingly.
Hosseini says although Synopsys is taking steps to remove costs and is well positioned for the migration to 130nm and 90nm chips, he sees risks to current expectations for the pace of electronic design automation retooling, as customers want to see a sustainable recovery first. He cut his $50 target to $40.