Cadence Design Systems (CDNS) has agreed to plead guilty and pay over $140 million to settle U.S. charges related to the sale of its chip design software to China. Separately, Cadence reported stronger second-quarter revenue and raised its full-year earnings forecast, driven by growing demand for its AI-related products. Following the results, CDNS stock gained over 8% as of this writing on Tuesday.
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Cadence is an electronic design automation (EDA) company, specializing in software and tools for designing integrated circuits and semiconductors.
Cadence Admits Guilt in China Sales Case
According to a filing with the Securities and Exchange Commission on Monday, Cadence disclosed that one of its subsidiaries made $45.3 million worth of sales to a Chinese customer, who then passed the products on to another party in China without obtaining the necessary approval from the U.S. government.
As part of the settlement, Cadence has agreed to strengthen its compliance with export regulations and undergo yearly audits.
Cadence Reports Solid Q2 Results
Cadence reported revenue of $1.28 billion for the quarter, up from $1.06 billion a year ago and slightly higher than analysts’ estimate of $1.25 billion. The growth was driven by a 25% rise in revenue from its intellectual property business and a 16% increase from its main electronic design software division.
Meanwhile, adjusted earnings came in at $1.65 per share, beating analysts’ forecast of $1.56.
Looking ahead, the company also raised its full-year profit forecast. It now expects adjusted earnings between $6.85 and $6.95 per share, compared to its earlier estimate of $6.73 to $6.83.
Is Cadence Stock a Good Buy?
According to TipRanks, CDNS stock has received a Strong Buy consensus rating, with 11 Buys and one Hold assigned in the last three months. The average Cadence stock price target is $349.83, which is 4% below the current level.
