Shares of Cadence Design Systems (CDNS) are up 6% after the computational software company reported better-than-expected financial results for this year’s third quarter.
The Silicon Valley-based company announced earnings per share (EPS) of $1.64, which was ahead of consensus estimates that called for earnings of $1.44 per share. Revenue in Q3 totaled $1.22 billion, which topped analyst forecasts of $1.18 billion.
In terms of guidance, Cadence Design Systems said it expects full-year earnings per share of $5.87 to $5.93. That was ahead of consensus views that called for 2024 EPS of $5.89. Management added that they anticipate full-year revenue of $4.61 billion to 4.65 billion, which also is ahead of Wall Street expectations of $4.62 billion.
Broad-Based Growth at Cadence Design
Breaking down Cadence Design System’s financial results shows broad-based growth across the company. Its System Design & Analysis business achieved 47% year-over-year revenue growth in Q3, while its IP business saw a 59% annualized increase. Revenue in the company’s Functional Verification segment grew 22% year-over-year.
Prior to the latest post-earnings move, CDNS stock had declined 7% this year. The company is known for providing conservative forward guidance, and that has hurt the share price. In April of this year, Cadence Design reported a record backlog of about $6 billion of orders. However, it also announced forward guidance that fell short of Wall Street estimates, sinking the stock.
Is CDNS Stock a Buy?
Cadence Design Systems stock has a consensus Moderate Buy rating among nine Wall Street analysts. That rating is based on seven Buy, one Hold, and one Sell recommendations made in the last three months. The average CDNS price target of $299.71 implies 18.57% upside from current levels.
