Morgan Stanley analyst Lee Simpson has maintained their bullish stance on CDNS stock, giving a Buy rating today.
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Lee Simpson’s rating is based on the strong performance and strategic positioning of Cadence Design Systems. Despite sales and earnings not meeting market expectations, the company has achieved record levels in both backlog and bookings, which demonstrates robust demand and future revenue potential. The guidance provided aligns with current models, reflecting the positive momentum of AI-enabled tools and the promising growth of new Z3/X3 products that are expected to enhance hardware growth and margins through 2025.
Cadence’s performance in Q4 exceeded expectations, with sales and operating margins surpassing consensus estimates. Additionally, the company’s guidance for FY25, although slightly below consensus in sales, shows a positive outlook with a focus on strong systems growth and continued momentum in IP. These factors contribute to the rationale behind the Buy rating, indicating confidence in Cadence’s ability to maintain growth and profitability.
Simpson covers the Technology sector, focusing on stocks such as Cadence Design, Synopsys, and ARM Holdings PLC ADR. According to TipRanks, Simpson has an average return of 3.9% and a 50.85% success rate on recommended stocks.
In another report released today, Bank of America Securities also maintained a Buy rating on the stock with a $350.00 price target.