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Investing.com - Rosenblatt raised its price target on Cadence Design Systems (NASDAQ:CDNS) to $320 from $300 on Tuesday, while maintaining a Neutral rating on the stock following the company’s second-quarter results. The stock, currently trading at $333.76 and near its 52-week high of $335.16, appears overvalued according to InvestingPro analysis.
Cadence reported Q2 2025 revenue of $1,275.4 million, representing approximately 20% year-over-year growth. This performance exceeded both Rosenblatt’s forecast of $1,215.2 million and the consensus estimate of $1,250 million.
The company’s strong performance was attributed to its renewed hardware lineup, growth in its Systems business, and solid IP sales, which accounted for 13% of total revenue. Despite a temporary shutdown in China during June, Cadence generated 9% of its revenue from the region in Q2, compared to 11% in Q1.
Rosenblatt estimates that the China shutdown created only a $22 million headwind, less than the approximately $40 million impact initially expected. The firm noted that increasing design complexity at lower nodes, higher failure costs, and new AI-related chip design starts continue to drive demand for prototyping and emulation solutions.
Cadence raised its annual growth target by 1% in Q2 and now aims for 12-14% growth this year, supported by its $6.4 billion backlog, renewed hardware lineup including the new Millennium M2000 simulation supercomputer, and AI-enhanced EDA tool demand.
In other recent news, Cadence Design Systems reported strong second-quarter 2025 results, surpassing market expectations. The company achieved an earnings per share (EPS) of $1.65, exceeding the forecasted $1.57, and reported revenues of $1.28 billion, beating the anticipated $1.26 billion. These results marked Cadence’s best hardware quarter on record, as noted by KeyBanc, which subsequently raised its price target for the company to $405 from $358, maintaining an Overweight rating. Meanwhile, Piper Sandler downgraded Cadence from Overweight to Neutral due to valuation concerns, although it increased the price target to $355 from $328. Despite the downgrade, Cadence’s performance included a 2% revenue beat and 100 basis points of upside to EBIT margins. The company also raised its full-year revenue and EPS guidance, indicating a positive outlook on its growth trajectory. These developments underscore the mixed analyst perspectives on Cadence Design Systems, reflecting both optimism and caution.
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