Cadence Design Systems Inc CDNS Stock Quote

Narrow-moat Cadence Design Systems reported a strong third quarter, posting results exceeding management’s guidance and our at-consensus expectations. Cadence continues to benefit from secular trends toward hyperscale computing, 5G communications, and artificial intelligence/machine learning, which all possess intensified demand for computing complexity, connectivity, and storage capability. We believe Cadence holds a unique position to capitalize on two semiconductor design industry tailwinds: advancing technologies requiring system-level designs, packaging, and analysis and increasing software content for systems companies. We remain impressed with Cadence’s deployment of expertise across software and hardware solutions and view management’s raised outlook for fiscal 2022 as appropriate. While there is looming concern over macroeconomic uncertainty involving recent chip export restrictions to China, we are confident in Cadence’s robust business and raise our fair value estimate to $161 from $157. We view shares as fairly valued.