CITIGROUP Analyst Terrence Whalen rates SYNOPSYS a SELL:

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Citigroup analyst Terence Whelan says Synopsys is a high quality stock and was his favorite electronic design automation stock from December 2006 until February 2008 based on consistent growth, margin expansion, and cash flow. But he says SNPS’s revised fiscal year 2009 (October) outlook softens all three merits.

Whelan says SNPS on its third quarter conference call issued preliminary fiscal year 2009 EPS guidance of $1.70-$1.80, vs. Street’s $1.90, implying 1%-9% growth on 6%-7% higher sales. He says the move is particularly surprising because SNPS indicated last quarter that fiscal year 2009 sales would grow 10%+, suggesting risk that this may be one of several downward revisions.

He cuts $1.90 fiscal year 2009 EPS estimate to $1.77, and $34 price target to $20. He prefers Cadence Design Systems and Mentor Graphics.