Analyst Note| Nupur Balain |
Narrow-moat Cadence Design Systems reported strong fourth-quarter and full-year results that exceeded both management guidance and our expectations. Trends in technology such as 5G, AI, data analytics, and hyperscale computing continue to serve as tailwinds for Cadence and contributed to robust top-line growth in all areas. Cadence continues to perform well by leveraging its Intelligent System Design strategy to generate long-term growth. We are raising our fair value estimate for Cadence to $106 per share from $98 per share due to slightly improved broad-based growth expectations and the time value of money. With shares trading at $142 after hours, we recommend investors wait for a pullback before investing.