What happened

Shares of Synopsys (NASDAQ:SNPS) gained 15.1% in May, according to data from S&P Global Market Intelligence. The stock climbed amid momentum for the broader market and also got a boost from better-than-expected second-quarter earnings.

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Synopsys reported second-quarter results on May 20, posting sales and earnings that topped the market's expectations. Revenue for the period climbed 3% year over year to $861.3 million, and non-GAAP (adjusted) earnings per share rose roughly 5.2% to reach $1.22.

A chip on a circuit board.

Image source: Getty Images.

So what

Synopsys management noted during its second-quarter call that the company was seeing design initiatives in the semiconductor industry continue unabated despite macroeconomic pressures created by the novel coronavirus.

Synopsys' semiconductor electronic design automation (EDA) business saw strong momentum in the quarter, and CEO Aart de Geus credited the company's Fusion Design Platform for helping to set new technical benchmarks, win business from competitors, and develop product breakthroughs. Management noted new business wins from a leading 5G edge-computing chip supplier in the Asian market, a major North American graphics-card company, and displacing competitors in the mobile space.

Now what

Synopsys stock has continued to climb in June's trading, with shares up roughly 3% in the month so far.

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Synopsys is guiding for third-quarter earnings between $1.33 and $1.38 per share on revenue of $875 million to $905 million. For comparison, the company posted adjusted earnings per share of $1.13 on sales of $853 million in Q3 2019.

For the full year, management is targeting adjusted earnings between $5.21 and $5.28 per share on sales of $3.60 billion to $3.65 billion. The company recorded adjusted earnings per share of $4.56 on sales of $3.36 billion last fiscal year. 

Synopsys stock trades at roughly 35.5 times this year's expected earnings.