CDNS Stock Forecast & Price Target

Cadence Design Systems has reported a backlog of $7 billion as of Q3, reflecting a 9.4% increase from the previous quarter, which enhances visibility and indicates a robust demand pipeline across its business segments. The company also demonstrated solid growth in its core EDA business, achieving an 11.7% year-over-year increase, and expects revenue growth of approximately 13% for the next three fiscal years, demonstrating confidence in sustainability. Furthermore, the upward revision of revenue projections to $5.277 billion for FY25 and $5.960 billion for FY26 underscores strong fundamentals, driven by increasing IP and core EDA demand.

Cadence Design Systems is projected to experience a significant slowdown in growth, with estimates indicating a growth rate of approximately 13% for FY25, a decline from the previous year's robust 19%. The company's non-GAAP operating margin is anticipated to peak in 2025 before decreasing to 41-42%, while GAAP margins are expected to decline to 28-29%, reflecting ongoing challenges in maintaining profitability amidst decelerating revenue growth. Additionally, the forecasted GAAP EPS for FY25 has been cut, indicating that for three consecutive years, there has been no growth in GAAP earnings, suggesting potential pressure on revenue and earnings moving forward.