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Shares of Cadence Design Systems Inc (NASDAQ:CDNS) rallied in early trading on Tuesday, after the company Monday reported upbeat second-quarter earnings.
Here are some key analyst takeaways.
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Piper Sandler: Despite export controls during June, Cadence managed to grow revenues by 20.2% year-on-year to $1.275 billion. That’s 2% higher than expectations, Jeffries said in the downgrade note. The company's EBIT margins topped consensus by 100 basis points (bps). That drove non-GAAP earnings to $1.65 per share. The company beat the consensus of $1.56 per share, he added.
Management raised their revenue outlook for 2025 by $50 million, driven by "stronger than expected bookings & a robust 2H pipeline across software & hardware," the analyst wrote. Operating margin guidance was raised by 20bps to 44% at the midpoint, while earnings projection was raised by 12 cents per share, he further stated.
Goldman Sachs: Investors expected Cadence to announce weaker results and guidance due to the U.S. export ban on EDA software to China, which is now been reversed, Schneider said. He added that the company indicated "stronger broad-based demand for its EDA products."
Core EDA revenue came in at $906 million, topping consensus of $884 million, Schneider stated. Cadence also has a growing customer base, he further wrote.
Schneider also noted Cadence’s IP and the "potential for significant pricing accretion from the provision of AI features in core EDA over time.”
CDNS Price Action: Cadence shares had risen by 8.83% to $363.23 at the time of publication on Tuesday.
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