CDNS Stock Forecast & Price Target

Cadence Design Systems demonstrated strong financial performance in Q4-24, achieving revenue of $1,356 million, a 27% year-over-year increase, driven by robust growth in their verification hardware cycle and system design business. The company's backlog rose to $6.8 billion, up from $5.6 billion in Q3, reflecting strong demand across business segments and providing clear visibility into future revenue streams. Additionally, Cadence maintained solid operating margins at 46%, while effectively controlling expenses, positioning the company for continued growth and profitability in the coming quarters.

Cadence Design Systems is facing a negative outlook due to an anticipated deceleration in revenue growth, with 2025 guidance projected at 11.6%, which falls short of both consensus estimates and previous expectations for stronger growth. The company’s reliance on EDA market share and expected low teens growth in intellectual property may result in overall performance lagging behind the market, alongside a troubling forecast for 1Q25 that indicates a potential pullback in IP and hardware revenue. Furthermore, management anticipates a slowdown in bookings activity and a decline in backlog, raising concerns about the sustainability of revenue streams as the company contends with pressure from competitors and a reliance on the uncertain performance of major clients like Intel.