Cadence Design Systems, Inc. (CDNS), headquartered in San Jose, California, is a leading provider of electronic design automation (EDA) software, semiconductor intellectual property, and system design and analysis tools. It enables customers to design complex integrated circuits, systems-on-chips, and advanced electronic products across semiconductor, automotive, aerospace, and consumer electronics markets. The company has a market capitalization of $87.17 billion.
Despite strong fundamentals, Cadence’s stock has been pressured by its valuation and sector-wide tech volatility. Over the past 52 weeks, the stock has dropped 11.2%. However, this year, the stock has regained some of that ground, up 1.3% year-to-date (YTD). It reached a 52-week high of $416.69 on June 2, but is down 24.1% from that level.
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Meanwhile, the broader S&P 500 Index ($SPX) has gained 19.3% and 12.4% over the same periods, respectively, indicating the stock has underperformed the broader market. Next, we compare the stock with its own sector. The State Street Technology Select Sector SPDR ETF (XLK) has gained 39.4% over the past 52 weeks and 28.9% YTD. As a result, the stock has underperformed its sector over these periods.
www.barchart.com Cadence has leaned heavily on its AI operations to lift its outlook. Both Design for AI and AI for Design fronts are experiencing solid demand. Better-than-expected Q2 earnings reflected this. The company’s backlog rose to $8.10 billion by the end of the quarter, and revenue expected to be recognized in the next 12 months from RPO was $4.20 billion.
For the current quarter, Wall Street analysts expect Cadence’s EPS to grow 6% YOY to $1.60 on a diluted basis. EPS is expected to increase 16.8% annually to $6.40 in fiscal 2026, followed by a 17.5% improvement to $7.52 in fiscal 2027.
Among the 23 Wall Street analysts covering Cadence’s stock, the consensus is a “Strong Buy.” That’s based on 18 “Strong Buy” ratings, one “Moderate Buy,” and four “Holds.” The ratings configuration has remained the same over the past month.
www.barchart.com Post the company’s second-quarter results, Rosenblatt analysts raised Cadence’s price target from $410 to $420, while maintaining a “Buy” rating on the stock. The analysts cited the solid results that the company posted for this raise.
Cadence’s mean price target of $408.05 indicates a 28.9% upside from current market prices. Moreover, the Street-high price target of $470 implies a potential upside of 48.5%.
On the date of publication, Anushka Dutta did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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