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Investing.com - Piper Sandler downgraded Cadence Design Systems (NASDAQ:CDNS) from Overweight to Neutral on Tuesday, while raising its price target to $355 from $328. According to InvestingPro data, the stock is trading near its 52-week high of $335.16, with an impressive market capitalization of $91.1 billion.
The downgrade comes despite Cadence reporting strong second-quarter 2025 results, which included a 2% revenue beat compared to consensus estimates and 100 basis points of upside to EBIT margins. The company maintains exceptional gross margins of 85.9% and has achieved 19.6% revenue growth over the last twelve months, as shown by InvestingPro metrics.
Cadence also raised its full-year 2025 revenue guidance by $50 million and increased its fiscal year EBIT margin forecast by 20 basis points, demonstrating continued robust performance despite approximately 33 days of uncertainty related to U.S. export controls. The company’s strong financial position is reflected in its GREAT overall health score from InvestingPro, which offers 12 additional exclusive insights about CDNS’s valuation and growth potential.
Piper Sandler cited valuation concerns as the primary reason for the downgrade, noting that shares rose approximately 7% in after-hours trading following the earnings report, pushing the stock’s valuation to roughly 45 times CY26 P/E or 48 times normalized CY26 free cash flow.
The revised $355 price target already reflects expectations of low-teens growth CAGR over the medium term and operating margins approaching 50%, according to Piper Sandler’s analysis.
In other recent news, Cadence Design Systems reported strong financial results for the second quarter of 2025, surpassing market expectations. The company announced an earnings per share of $1.65, which exceeded the forecasted $1.57. Additionally, Cadence Design Systems reported revenues of $1.28 billion, surpassing the anticipated $1.26 billion. These results prompted the company to raise its full-year revenue and earnings per share guidance, indicating a positive outlook on its growth trajectory. The financial performance highlights Cadence Design Systems’ ability to exceed analyst predictions, showcasing its robust business operations. The company did not announce any mergers or acquisitions in recent developments. Analyst firms have not reported any upgrades or downgrades for Cadence Design Systems at this time. These updates reflect the latest developments regarding Cadence Design Systems’ financial health and market performance.
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