Electronic systems design company Cadence Design Systems (NASDAQ:CDNS) slipped in pre-market trading after its outlook left investors disappointed. In the first quarter, Cadence expects revenue between $990 million and $1.01 billion, with adjusted earnings likely to be in the range of $1.10 to $1.14 per share. This forecast fell short of Street estimates of $1.09 billion in revenue and adjusted earnings of $1.37 per share.
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Management noted that the bleak Q1 FY24 forecast was due to a difficult comparison regarding its hardware business. The company noted a surge in hardware shipping in Q1 FY23, thanks to a high backlog in the fourth quarter of FY22. Cadence pointed out that the demand for its hardware in the first quarter of FY24 aligns with normal levels.
For FY24, the firm has projected revenues in the range of $4.55 billion to $4.61 billion, while adjusted earnings are likely to be between $5.87 and $5.97 per share. Analysts had forecast adjusted earnings of $5.89 per share on revenues of $4.58 billion.
Cadence posted revenues of $1.07 billion in the fourth quarter, up by 18.8% year-over-year and above consensus estimates of $1.06 billion. The company reported an adjusted diluted net income of $1.38 per share compared to $0.96 in the same period last year. This surpassed analysts’ expectations of $1.33 per share.
Is CDNS Stock a Buy?
Analysts remain bullish about CDNS stock with a Strong Buy consensus rating based on three unanimous Buy. Over the past year, CDNS has soared by more than 60%, and the average CDNS price target of $316.67 implies an upside potential of 3.3% at current levels.
