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Investing.com - Wolfe Research has raised its price target on Cadence Design Systems (NASDAQ:CDNS) to $385 from $370 while maintaining an Outperform rating on the stock. According to InvestingPro data, 14 analysts have recently revised their earnings estimates upward, with the consensus target suggesting further upside potential for the $95.75 billion market cap company.
The firm cited Cadence’s strong third-quarter 2025 performance, which exceeded expectations in both revenue and earnings, driven by broad-based strength across geographies and product segments. The company maintains impressive gross profit margins of 85.57% and achieved robust revenue growth of 22.29% over the last twelve months. Intellectual Property and Hardware segments performed particularly well, with the company’s backlog expanding to $7 billion.
Cadence has benefited from China’s recovery following the lifting of restrictions, as well as continued business momentum across its markets. Management expects these positive trends to continue, highlighting the company’s differentiated positioning in artificial intelligence through partnerships with leading AI innovators.
Wolfe Research values Cadence at 48 times CY26 estimated P/E, representing a 35% premium over its price target for Synopsys. This premium reflects Cadence’s more attractive organic growth trajectory compared to its peers.
Cadence Design Systems stock has risen 17% year-to-date, outperforming Synopsys, which is down 4% during the same period, while keeping pace with the broader IGV software index, which is also up 17%. Trading near its 52-week high with a P/E ratio of 94.84x, InvestingPro analysis indicates the stock is currently overvalued. Discover 12 additional exclusive ProTips and comprehensive valuation metrics with an InvestingPro subscription.
In other recent news, Cadence Design Systems Inc. reported its third-quarter 2025 earnings, which exceeded analysts’ expectations. The company announced an earnings per share (EPS) of $1.93, outperforming the projected $1.79, resulting in a 7.82% surprise. Revenue for the quarter reached $1.34 billion, slightly surpassing the forecasted $1.32 billion. These results highlight Cadence Design’s continued financial performance strength. Additionally, analysts from various firms have noted these developments, providing insights into the company’s robust earnings. The recent earnings report has drawn attention from investors and analysts alike. Cadence Design’s performance in this quarter reflects its strategic initiatives and market position. The company’s ability to surpass revenue and earnings estimates is a focal point in the recent discussions among investors.
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