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Investing.com - Loop Capital has raised its price target on Cadence Designs (NASDAQ:CDNS) to $370.00 from $340.00 while maintaining a Buy rating on the stock. The company, currently trading at $320.60 and near its 52-week high of $330.09, maintains an impressive gross profit margin of 85.86% and carries a "GREAT" financial health score according to InvestingPro analysis.
The firm noted that the month-long U.S. export ban for China-bound electronic design automation (EDA) will likely distort Cadence’s second-quarter 2025 results and third-quarter outlook.
Loop Capital expects approximately 4-5% of Cadence’s second-quarter total revenue to shift out of the quarter and be redistributed into the second half of fiscal year 2025, though the company’s overall FY25 revenue guidance is expected to remain unchanged.
Despite the export control challenges, Loop Capital believes Cadence’s licensing activity and business pipeline remain strong, with the broadly improving chip cycle further enhancing licensing activity compared to management’s messaging from early May.
The price target increase from $340 to $370 is based on higher peer-group multiples, with Loop Capital reiterating Cadence as one of its top long-term, Buy-rated ideas.
In other recent news, Cadence Design Systems reported several significant developments. The Bureau of Industry and Security of the U.S. Department of Commerce has rescinded export license requirements for Cadence’s electronic design automation software when dealing with China, allowing the company to restore access to its technology for Chinese customers. Goldman Sachs initiated coverage on Cadence with a Buy rating, highlighting the company’s growth potential in the semiconductor industry and setting a price target of $380. KeyBanc Capital Markets also raised its price target for Cadence to $358, maintaining an Overweight rating due to reduced risks from China-related issues. Cadence has announced the industry’s first LPDDR6/5X memory IP solution, designed to meet the demands of AI and high-performance computing markets. Additionally, Cadence expanded its collaboration with Samsung (KS:005930) Foundry through a new multi-year IP agreement, focusing on AI-driven design flows for advanced process nodes. These recent developments indicate Cadence’s ongoing efforts to strengthen its market position and technological capabilities.
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