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Cadence Design Systems Inc - Stock Quote CDNS

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Morningstar's Cadence Design Systems Inc Stock Analysis

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Cadence’s Unrelenting Demand Landscape Drives Q1 Outperformance; Raising FVE to $146

Analyst Note

| Victoria Radke |

Narrow-moat Cadence Design Systems reported a strong first quarter, with the top and bottom line exceeding both management’s and our at-consensus expectations. Cadence continues to benefit from secular trends toward hyperscale computing, 5G communications, and AI/ML, which are all accelerating computing complexity, connectivity, and storage needs. While Cadence, like others in the space, benefits from this golden era of semiconductor design demand, we view the firm to be uniquely positioned to favorably capitalize on two key industry dynamics: advancing technologies requiring system-level designs, packaging, and analysis, and systems companies with more software content requiring hardware platforms for software bring-up. As a result, we view the firm as jointly benefiting from an overall industry boom and a preferential positioning with its systems portfolio, and view management’s raised outlook for fiscal 2022 as appropriate. We are raising our fair value estimate to $146 per share, from $138, and view shares as slightly overvalued.

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Cadence Design Systems Inc's Company Profile

Business Description

Cadence Design Systems is a provider of electronic design automation software, intellectual property, and system design and analysis products. EDA software automates the chip design process, enhancing design accuracy, productivity, and complexity in a full-flow end-to-end solution. Cadence offers a portfolio of design IP, as well as system design and analysis products, which enable system-level analysis and verification solutions. Cadence’s comprehensive portfolio is benefiting from a mutual convergence of semiconductor companies moving up-stack toward systems-like companies, and systems companies moving down-stack toward in-house chip design. The resulting expansion in EDA customers, alongside secular digitalization of various end markets, benefits EDA vendors like Cadence.

2655 Seely Avenue, Building 5
San Jose, CA, 95134
T +1 408 943-1234
Sector Technology
Industry Software - Application
Most Recent Earnings Mar 31, 2022
Fiscal Year End Jan 1, 2023
Stock Type Aggressive Growth
Employees 9,300