Cadence Design Systems Posts Strong Q3 Results

Computational software company Cadence Design Systems, Inc. (CDNS) has reported better-than-expected results for the third quarter ended October 2, 2021.

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Following the news, shares of the company declined 1.7% to close at $164.50 in extended trade on Monday.

Cadence Design Systems reported quarterly revenues of $751 million, up 12.6% from the same quarter last year. Further, the figure topped the consensus estimate of $744.26 million. The growth in revenues can be attributed primarily to a 12% year-over-year rise witnessed in the revenues generated by the company’s Product and Maintenance segment, which made up about 94% of the total quarterly revenues.

The company reported earnings of $0.80 per share, up 14.3% year-over-year. Moreover, the figure surpassed the consensus estimate of $0.75 per share.

Notably, the company also provided guidance for the fourth quarter of 2021. Cadence expects to post revenues between $745 million and $765 million in the fourth quarter. The consensus for the same stands at $746 million. Further, it expects to report earnings in the range of $0.76 per share and $0.80 per share. The Street expects the company to post earnings of $0.75 per share.

The CEO of Cadence Design Systems, Lip-Bu Tan, said, “Cadence delivered stronger than expected financial results for the third quarter, fueled by accelerating demand for our highly differentiated solutions. Design activity remains robust and the Cadence team continues to execute exceedingly well to our Intelligent System Design strategy.” (See Cadence Design Systems stock chart on TipRanks)

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On October 25, UBS analyst Pradeep Ramani reiterated a Hold rating on the stock. The analyst, however, raised the price target to $170 from $155, which implies upside potential of 1.6% from current levels.

The Wall Street community is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on 5 Buys, 1 Hold and 1 Sell. The average Cadence Design Systems price target of $168.57 implies that the stock has upside potential of 0.7%.

CDNS scores a “Perfect 10” from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations. Shares have gained about 52.3% over the past year.