Cadence Design Systems (CDNS) has reported third-quarter financial results that topped Wall Street estimates.
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The company, which makes software used to design semiconductors and processors, announced earnings per share (EPS) of $1.93, which was better than the $1.79 consensus forecast of analysts. Revenue for the third quarter came in at $1.34 billion versus Wall Street’s expectation of $1.32 billion. Sales were up 10% from a year earlier.
Looking ahead, Cadence Design issued full-year 2025 guidance for earnings per share of $7.02 to $7.08. That too was ahead of the analyst consensus that called for $6.93. As for revenue, the company is now forecasting 2025 sales of $5.26 billion to $5.29 billion. The revenue outlook is ahead of the current analyst consensus of $5.25 billion.
Cadence Design Systems’ income statement. Source: Main Street Data
Stock Falls
Cadence Design Systems also reported an adjusted operating margin of 47.6% for the third quarter, exceeding analyst estimates and up from 44.8% a year ago. Despite the solid print, shares of Cadence Design Systems are down about 1% immediately after the Q3 financial results were made public.
The decline effectively erases the gains CDNS stock achieved during normal trading hours on Oct. 27. The reason the stock is down is likely because of lingering concerns related to the U.S.-China trade dispute. A key part of the global chipmaking ecosystem, Cadence Design has become a bargaining chip in U.S. trade negotiations with China. The company generated 12% of its annual revenue in China during 2024.
Is CDNS Stock a Buy?
The stock of Cadence Design Systems has a consensus Strong Buy rating among 16 Wall Street analysts. That rating is based on 13 Buy, two Hold, and one Sell recommendations issued in the last three months. The average CDNS price target of $371.94 implies 5.85% upside from current levels. These ratings are likely to change after the company’s financial results.
