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Cadence Design Systems Inc CDNS

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Morningstar’s Analysis

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Cadence Outperforms on All Fronts As New Product Launches Gain Traction; Maintaining FVE at $106

Abhinav Davuluri, CFA Sector Strategist

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.

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Company Profile

Business Description

Cadence Design Systems was founded in 1988 after the merger of ECAD and SDA Systems. Cadence is known as an electronic design automation, or EDA, firm that specializes in developing software, hardware, and intellectual property that automates the design and verification of integrated circuits or larger chip systems. Historically, semiconductor firms have relied on the firm's tools, but there has been a shift toward other nontraditional "systems" users given the development of the Internet of Things, artificial intelligence, autonomous vehicles, and cloud computing. Cadence is headquartered in Silicon Valley, has approximately 8,100 employees worldwide, and was added to the S&P 500 in late 2017.

2655 Seely Avenue, Building 5
San Jose, CA, 95134
T +1 408 943-1234
Sector Technology
Industry Software - Application
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Aggressive Growth
Employees 8,800