Cadence: Durable Growth, Conservative Guidance, and AI-Driven Upside Support Overweight Rating

In a report released today, Lee Simpson from Morgan Stanley maintained a Buy rating on Cadence Design, with a price target of $370.00.

Lee Simpson has given his Buy rating due to a combination of factors that point to durable growth and solid execution. Cadence delivered another quarter of outperforming expectations on revenue, margins, and EPS, while issuing guidance that is modestly ahead of consensus and confirming double‑digit sales expansion into 2026, backed by a record backlog and robust hardware demand, particularly in China.

He also views management’s guidance as conservative given last year’s strong incremental margins, potential efficiency gains from greater internal use of AI in R&D, and ongoing strength in high‑value areas such as 3D‑ICs and physical AI. Although there are some concerns around systems simulation and LLM‑driven changes in software demand, Simpson believes these risks are manageable and that Cadence’s positioning, new agentic offerings, and momentum into 1H26 support an Overweight stance and a long‑term constructive view on the stock.

According to TipRanks, Simpson is a 3-star analyst with an average return of 3.3% and a 55.43% success rate. Simpson covers the Technology sector, focusing on stocks such as Cadence Design, Synopsys, and STMicroelectronics NV.

In another report released today, Citi also reiterated a Buy rating on the stock with a $385.00 price target.