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Investing.com - Rosenblatt raised its price target on Cadence Design Systems (NASDAQ:CDNS) to $335 from $320 on Tuesday, while maintaining a Neutral rating following the company’s third-quarter results. The company, currently valued at $95.75 billion, has demonstrated impressive financial health, with InvestingPro data showing 14 analysts revising their earnings estimates upward for the upcoming period.
The electronic design automation company reported revenue of $1,339 million for the third quarter of 2025, representing approximately 10% year-over-year growth and exceeding both Rosenblatt’s forecast of $1,320.9 million and consensus estimates of $1,322.8 million.
Cadence’s performance was bolstered by a significant recovery in China, which accounted for 18% of total revenue in the third quarter compared to 9% in the previous quarter, along with increased upfront revenue from hardware and licenses at 18% of total revenue versus 17% last year. The company maintains impressive gross profit margins of 85.57% and has achieved 22.29% revenue growth over the last twelve months.
The company’s backlog grew approximately 9% sequentially to $7 billion from $6.4 billion in the second quarter, including $150 million from Chinese customers being added back into the mix, with further growth expected by year-end due to fourth-quarter renewal activity.
Following these results, Cadence marginally increased its outlook for fiscal year 2025, prompting Rosenblatt to raise its forecasts for 2025-2027, though the firm maintained its Neutral stance while awaiting "a more attractive entry point." According to InvestingPro analysis, the stock appears to be trading above its Fair Value, with additional insights and detailed valuation metrics available in the comprehensive Pro Research Report.
In other recent news, Cadence Design Systems reported its third-quarter 2025 earnings, which exceeded analysts’ expectations. The company achieved an earnings per share of $1.93, surpassing the forecasted $1.79, resulting in a 7.82% surprise. Revenue also came in higher than anticipated at $1.34 billion, slightly above the $1.32 billion estimate. Wolfe Research responded to these strong results by raising its price target for Cadence Design to $385 from $370, maintaining an Outperform rating. The firm’s decision was influenced by the company’s robust performance across various geographies and product segments, particularly in the Intellectual Property and Hardware sectors. Additionally, Cadence Design’s backlog expanded to $7 billion, indicating continued demand for its offerings. These developments reflect positively on Cadence Design’s financial health and market position.
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