Analyst Lee Simpson of Morgan Stanley maintained a Buy rating on Cadence Design, retaining the price target of $360.00.
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Lee Simpson has given his Buy rating due to a combination of factors that highlight Cadence Design’s strong financial performance and promising growth prospects. The company reported a solid third quarter, exceeding expectations with its profit margins and earnings per share, while sales remained consistent with projections, showing a year-over-year increase of approximately 10%. Notably, Cadence Design achieved a record quarter for hardware, and its Electronic Design Automation (EDA) segment grew by 12% year-over-year and 5% quarter-over-quarter.
Additionally, the company’s performance in China showed significant improvement, with sales increasing by about 53% year-over-year. The acquisition of Arm Artisan contributed positively to the company’s Intellectual Property (IP) sales, which rose by 10% year-over-year and 13% quarter-over-quarter. Furthermore, Cadence Design’s bookings surpassed expectations, with a backlog increase to $7.0 billion. The company’s sales guidance for the fiscal year 2025 was raised to a 14% year-over-year growth, driven by demand in artificial intelligence, which also led to an upward revision in operating profit margins and earnings per share forecasts.
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 3.6% and a 52.50% success rate on recommended stocks.
In another report released today, Needham also maintained a Buy rating on the stock with a $390.00 price target.