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Investing.com - Rosenblatt Securities maintained its Neutral rating and $320.00 price target on Cadence Design Systems (NASDAQ:CDNS) ahead of the company’s third-quarter earnings report scheduled for October 27. According to InvestingPro data, 14 analysts have recently revised their earnings estimates upward, with price targets ranging from $200 to $410.
The firm expects Cadence to report revenues of $1,321 million for the quarter ending September 30, representing an 8.7% year-over-year increase despite facing a difficult comparison period. This projection falls within Cadence’s guidance range of $1,305-$1,335 million. The company has demonstrated strong financial performance with impressive gross margins of 85.57% and healthy liquidity, maintaining a current ratio of 2.82.
Rosenblatt anticipates the second half of fiscal year 2025 will be driven by higher hardware contributions, steady Digital EDA software performance, and growing contributions from AI-driven products and the simulation portfolio, while noting a tempered market contribution from China.
The research note mentioned Cadence’s agreement last month to acquire Hexagon’s MSC Software unit for approximately $3.1 billion. The acquisition target generates approximately $280 million in annual revenue and is expected to close in the first quarter of 2026.
Rosenblatt maintains its full-year 2025 revenue growth forecast of 12.9% for Cadence, with the MSC Software acquisition not yet factored into its projections. Based on InvestingPro’s Fair Value analysis, the stock appears to be trading near its fair value. Discover 12 additional exclusive ProTips and comprehensive valuation metrics with an InvestingPro subscription.
In other recent news, Cadence Design Systems announced a definitive agreement to acquire Hexagon AB’s Design & Engineering business for approximately €2.7 billion. The acquisition will involve a combination of cash and Cadence common stock, with the transaction expected to close in early 2026, pending regulatory approvals. In addition, Cadence has launched ROCS X, an AI-enabled virtual screening tool developed in collaboration with Treeline Biosciences, aimed at enhancing drug discovery efforts. Furthermore, Cadence has expanded its partnership with Taiwan Semiconductor Manufacturing Company (TSMC) to support advanced process nodes, including N3, N2, and A16 technologies, through its AI design flows. The Cadence Giving Foundation also announced a multi-year commitment to expand the AI Hub at San José State University, providing AI design software and digital twin technology to prepare students for careers in artificial intelligence. Additionally, Stifel has maintained its Buy rating on Cadence Design Systems, following a discussion at the 2025 Tech Executive Summit, emphasizing Cadence’s strategic focus on AI-first silicon and system design. These developments reflect Cadence’s ongoing efforts to enhance its technological capabilities and strategic partnerships.
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