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Valued at a market cap of $71.2 billion, Cadence Design Systems, Inc. (CDNS) provides software, hardware, and other services that help customers to design electronic products. The San Jose, California-based company’s core electronic design automation (EDA) software and services enable engineers to develop different types of Integrated Circuits (IC). It is expected to announce its fiscal Q1 earnings for 2025 after the market closes on Monday, Apr. 28.
Prior to this event, analysts project this software company to report a profit of $1.17 per share, up 37.7% from $0.85 per share in the year-ago quarter. The company has surpassed Wall Street's bottom-line estimates in two of the last four quarters, while missing on two other occasions. Its earnings of $1.49 per share in the previous quarter fell short of the consensus estimates by 1.3%.
For the full year, analysts expect CDNS to report EPS of $5.37, up 19.3% from $4.50 in fiscal 2024. Its EPS is expected to further grow 18.4% year over year to $6.36 in fiscal 2026.
CDNS has fallen 14.8% over the past 52 weeks, underperforming both the S&P 500 Index's ($SPX) 5.5% rise, and the Technology Select Sector SPDR Fund’s (XLK) 2.6% loss over the same time frame.
On Feb. 18, CDNS reported its Q4 results, with adjusted earnings of $1.88 per share and revenue of $1.4 billion, reflecting year-over-year growth of 36.2% and 26.9%, respectively. Moreover, both the figures exceeded consensus estimates. However, despite delivering better-than-expected performance, the stock declined 8.8% in the subsequent trading session. The fall in the stock price was primarily driven by a cautious 2025 outlook, which signaled a potential slowdown in revenue growth. The company anticipates its fiscal 2025 revenue between $5.1 billion and $5.2 billion, and expressed a conservative view on its China business, expecting flat revenue from the region.
Wall Street analysts are highly optimistic about CDNS’ stock, with a "Strong Buy" rating overall. Among 18 analysts covering the stock, 14 recommend "Strong Buy," one advises a “Moderate Buy,” two suggest “Hold,” and one indicates a “Strong Sell” rating. The average price target for CDNS is $324.39, which indicates a 24.5% potential upside from the current levels.
