Analyst Note| Abhinav Davuluri, CFA |
Narrow-moat Cadence Design Systems reported second-quarter results that exceeded both management’s and our expectations across all key metrics, alongside an announcement of the transition of CEO leadership later this year. We maintain our fair value estimate at $106 and recommend waiting for a pullback before investing. Cadence continues to benefit from secular tailwinds in the semiconductor industry as trends in 5G, AI/ML, data analytics, and hyperscale computing accelerate. We remain confident in the company’s intelligent system design strategy as products continue to successfully benefit customers beyond the core EDA space.