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Investing.com - Stifel raised its price target on Cadence Design Systems (NASDAQ:CDNS) to $395 from $350 while maintaining a Buy rating following the company’s strong second-quarter performance. The $99 billion market cap company, which according to InvestingPro analysis is currently trading above its Fair Value, has demonstrated impressive financial metrics.
Cadence reported second-quarter revenue of $1.275 billion, exceeding consensus estimates of $1.250 billion and representing 20% year-over-year growth. The company’s adjusted earnings per share reached $1.65, surpassing the $1.56 consensus estimate and marking a 29% increase from the previous year. InvestingPro data reveals the company maintains impressive gross profit margins of 86% and has received a "GREAT" overall financial health score.
Growth was broad-based across Cadence’s business segments, with Electronic Design Automation (EDA) up 16% year-over-year, Intellectual Property (IP) rising 25%, and System Design and Analysis (SD&A) growing 35%. The company overcame approximately six weeks of China-ban impact during the quarter through strength in other regions.
For the third quarter, Cadence issued guidance that met revenue expectations while exceeding consensus on adjusted operating margin (45.5% versus 44.4%) and adjusted EPS ($1.78 versus $1.73). The company also allocated $140.6 million for a Department of Justice and Bureau of Industry and Security settlement.
Cadence raised its full-year 2025 guidance, increasing revenue projections by $50 million to $5.240 billion and lifting EPS guidance to $6.90 from $6.78, supported by AI/HPC proliferation, strong second-half renewals, and a $140 million cash tax benefit primarily in the fourth quarter. For deeper insights into Cadence’s valuation and growth prospects, including 12 additional ProTips and comprehensive financial analysis, check out the detailed Pro Research Report available on InvestingPro.
In other recent news, Cadence Design Systems reported strong second-quarter results, with revenue reaching $1,275.4 million, marking a 20% year-over-year growth. This performance exceeded both Rosenblatt’s forecast of $1,215.2 million and the consensus estimate of $1,250 million. KeyBanc highlighted that this quarter was Cadence’s best hardware quarter on record, exceeding revenue expectations by $21 million. Despite facing a revenue headwind due to a U.S. export ban targeting China, Cadence’s June quarter revenue and earnings per share surpassed expectations, as noted by Loop Capital. Analysts have responded positively, with KeyBanc raising its price target to $405 while maintaining an Overweight rating. Loop Capital also increased its price target to $390, maintaining a Buy rating. Needham followed suit, raising its price target to $390, citing strong earnings and guidance that exceeded Street expectations. Rosenblatt adjusted its price target to $320, maintaining a Neutral rating on the stock.
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