KeyBanc Capital Markets has adjusted its price target for Cadence Design Systems (CDNS, Financial), reducing it from $375 to $340. This revision comes in response to new export restrictions linked to China. Although there is limited information and ongoing uncertainty, KeyBanc has decided to maintain its current financial estimates for Cadence until more details surface.
The firm conducted a downside analysis that could potentially impact Cadence's earnings per share, with a predicted decrease of $0.95 in 2025 and $1.74 in 2026. Despite these challenges, KeyBanc remains optimistic about the enduring growth potential of electronic design automation (EDA) tools, driven by multiple robust factors. Nevertheless, they acknowledge the immediate risks associated with the China-related developments.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 20 analysts, the average target price for Cadence Design Systems Inc (CDNS, Financial) is $320.53 with a high estimate of $365.00 and a low estimate of $200.00. The average target implies an upside of 9.57% from the current price of $292.53. More detailed estimate data can be found on the Cadence Design Systems Inc (CDNS) Forecast page.
Based on the consensus recommendation from 22 brokerage firms, Cadence Design Systems Inc's (CDNS, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Cadence Design Systems Inc (CDNS, Financial) in one year is $342.49, suggesting a upside of 17.08% from the current price of $292.53. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Cadence Design Systems Inc (CDNS) Summary page.
CDNS Key Business Developments
Release Date: April 28, 2025
- Revenue: $1.242 billion, 23% year-over-year growth.
- Non-GAAP EPS: $1.57, 34% increase year-over-year.
- GAAP EPS: $1.00.
- Non-GAAP Operating Margin: 41.7%.
- GAAP Operating Margin: 29.1%.
- Cash Balance: $2.778 billion at quarter end.
- Operating Cash Flow: $487 million.
- Debt Outstanding: $2.5 billion.
- Share Repurchase: $350 million used to repurchase shares.
- IP Business Growth: 40% year-over-year in Q1.
- Core EDA Revenue Growth: 16% year-over-year in Q1.
- System Design & Analysis Revenue Growth: Over 50% year-over-year in Q1.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cadence Design Systems Inc (CDNS, Financial) reported a 23% year-over-year revenue growth and a 34% increase in non-GAAP EPS for Q1 2025, exceeding guidance on all key financial metrics.
- The company raised its financial outlook for 2025, reflecting confidence in continued business strength and resilience.
- Cadence's IP business grew 40% year-over-year in Q1, driven by strong market opportunities in AI, chiplet-based architectures, and the foundry ecosystem.
- The company expanded its partnerships with major industry players like NVIDIA, Intel, and Rapidus, enhancing its ecosystem and market reach.
- Cadence was recognized as one of the 100 best companies to work for by Fortune and Great Place to Work, highlighting its strong corporate culture.
Negative Points
- Despite strong performance, Cadence remains cautious about its China business, maintaining a flat revenue outlook for the region due to macroeconomic uncertainties.
- The company faces potential risks from export control regulations and tariffs, although it currently reports no significant impact on its operations.
- Cadence's hardware revenue is limited by production capacity, with demand outstripping supply, which could constrain growth in this segment.
- The acquisition of Arm's Artisan Foundation IP business has not yet closed and is not included in the current guidance, adding uncertainty to future financial projections.
- The company acknowledges the dynamic macro environment and continues to monitor potential impacts on customer behavior and market conditions.
