Nucor earnings beat by $0.08, revenue fell short of estimates
On Friday, KeyBanc Capital Markets expressed a generally positive outlook for the Vertical Software (ETR:SOWGn), Human Capital Management (HCM), and DevOps sectors as the new year unfolds. Analysts at the firm have identified several companies poised for growth in 2025, despite acknowledging that the previous year was challenging, with only a few companies outperforming the Nasdaq.
ServiceTitan, referred to by its ticker TTAN, has been upgraded to an Overweight rating by KeyBanc, given its strong position in the under-digitized trades industry. The company's minimal competition, significant addressable market, and robust gross retention rates position it as a leading Vertical Software company. ServiceTitan's growth may be further bolstered by better-than-expected gross transaction volume (GTV) growth, high product attachment rates, and momentum in its Commercial segment, which could lead to upward revisions in growth estimates.
Cadence Design Systems (NASDAQ:CDNS) is seen as a potential growth accelerator for 2025, supported by a hardware refresh cycle. The firm maintains high conviction in the Electronic Design Automation (EDA) sector, anticipating Cadence's new Z3/X3 products to significantly contribute to financial results throughout 2025, building on a strong backlog from the previous year. The company's impressive 87.79% gross profit margin and solid 14.24% return on assets demonstrate operational excellence.
According to InvestingPro analysis, CDNS appears overvalued at current levels, despite showing a healthy 14.99% return over the past year. Analysts at KeyBanc suggest that there is a possibility of revenue growth accelerating to mid-teens percentages.[Get access to 13 additional ProTips and comprehensive valuation metrics for CDNS with InvestingPro. Our Pro Research Report provides deep insights into Cadence's financial health, growth prospects, and competitive position.]
GitLab (NASDAQ:GTLB) is recognized for its multiple growth drivers in the DevOps space. The company's recent progress with its Duo product and improved large deal activity are seen as positive indicators. With the stock currently trading at 10 times FY26E (CY25) enterprise value to sales, KeyBanc sees a favorable risk-reward scenario where modest growth could lead to an expansion in multiples.
Autodesk (NASDAQ:ADSK), after a notable performance in 2024, is expected to continue its growth trajectory focused on margin improvement and free cash flow (FCF) growth under the guidance of new CFO Janesh Moorjani. The company has a significant number of multi-year deals up for renewal, which could potentially accelerate core growth in 2025.
Lastly, KeyBanc has downgraded AppFolio (NASDAQ:APPF) to a Sector Weight rating, signaling a neutral stance on the stock. The firm's analysts are cautiously optimistic about recovery in the construction sector and remain wary of exposure to automotive and manufacturing sectors. Despite positive sentiments for the HCM/Payroll segment, they believe it is too early to predict a sector-wide acceleration. According to InvestingPro, Cadence maintains a "GOOD" Financial Health score of 2.89, suggesting resilience in the current market environment.
In other recent news, Cadence Design Systems reported a significant 19% increase in total revenue for the third quarter of 2024, reaching $1.215 billion. This growth was largely driven by the company's AI-driven solutions and design enablement offerings.
The company also updated its full-year earnings per share (EPS) outlook and expects fourth-quarter revenue to be between $1.325 billion and $1.365 billion. Cadence has also updated its 2024 revenue forecast to $4.61 billion to $4.65 billion, with GAAP EPS projected between $3.70 and $3.76.
In addition to the financial highlights, Cadence announced the appointment of Moshe Gavrielov to its board of directors, effective January 1, 2025. Gavrielov brings a wealth of experience from his current roles on the boards of NXP Semiconductors (NASDAQ:NXPI) N.V. and Taiwan Semiconductor Manufacturing Company Ltd., as well as his chairmanship at Foretellix and SiMa.ai.
Loop Capital initiated coverage on Cadence Design Systems, setting a new price target of $360 with a Buy rating. The firm's analysis highlighted the growth potential in the semiconductor design sector and the strategic value of investing in Cadence Design.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.