CDNS Stock Forecast & Price Target

Cadence Design Systems reported a backlog of $7.0 billion in Q3, an increase of 9.4% from the previous quarter, which enhances the company's visibility and positions it for continued growth in upcoming quarters. The company's core Electronic Design Automation (EDA) revenue grew by 11.7% year-over-year, underscoring robust demand across its business segments and reflecting a strong pipeline heading into Q4. With projected revenue growth rates of approximately 13% for multiple fiscal years and an increase in expected FY25 revenue to $5.277 billion, Cadence's strong backlog and growth metrics suggest a solid foundation for sustained performance.

Cadence Design Systems is projected to experience a growth rate decline to approximately 13% for FY25, a reduction from the previous year's 19%. Additionally, the non-GAAP operating margin is forecasted to peak at 41-42% in 2025 before declining, while GAAP margin is expected to fall to 28-29%, suggesting diminishing profitability. Furthermore, revenue growth is anticipated to decelerate to less than 5% year-over-year, down from the previous quarter's 10%, indicating potential challenges in maintaining financial momentum.