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Cadence Design Systems Inc CDNS Stock Quote

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Morningstar‘s Stock Analysis CDNS

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Cadence Enjoys Stellar Growth Despite an Uncertain Landscape; Raising FVE to $161

Abhinav Davuluri, CFA Sector Strategist

Analyst Note

| Abhinav Davuluri, CFA |

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.

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Company Profile CDNS

Business Description

Cadence Design Systems is a provider of electronic design automation software, intellectual property, and system design and analysis products. EDA software automates the chip design process, enhancing design accuracy, productivity, and complexity in a full-flow end-to-end solution. Cadence offers a portfolio of design IP, as well as system design and analysis products, which enable system-level analysis and verification solutions. Cadence’s comprehensive portfolio is benefiting from a mutual convergence of semiconductor companies moving up-stack toward systems-like companies, and systems companies moving down-stack toward in-house chip design. The resulting expansion in EDA customers, alongside secular digitalization of various end markets, benefits EDA vendors like Cadence.

2655 Seely Avenue, Building 5
San Jose, CA, 95134
T +1 408 943-1234
Industry Software - Application
Most Recent Earnings Sep 30, 2022
Fiscal Year End Jan 1, 2023
Employees 9,300