Cadence Reports Robust Q2 Results, Ups Guidance

California-based multinational computational software firm Cadence Design Systems (CDNS) reported strong financial results for the second quarter of 2021 on broad-based customer demand. The company manufactures electronic devices and integrated circuits for health, aerospace, automotive, 5G communications and hyperscale computing industries.

Adjusted earnings per share (EPS) came in at $0.86, surpassing the analysts’ expectations of $0.76 and the prior-year EPS of $0.66. Quarterly revenue totaled $728 million, compared to $638 million for the same period in 2020, and beat the Street’s estimates of $721.16 million.

Product and Maintenance revenue amounted to nearly $688 million, up from $601 million in the year-ago quarter. Services revenue increased to $40.4 million from $37 million in the second quarter of 2020. (See Cadence stock chart on TipRanks)

The Senior Vice-President and Chief Financial Officer of Cadence, John Wall, said, “Cadence exceeded all of its key financial metrics for the second quarter and as a result, we are raising our outlook for the year.”

For the third quarter of 2021, the company expects total revenue to range between $730 million and $750 million and adjusted EPS in the range of $0.74 to $0.76. For full-year 2021, Cadence expects to post total revenue in the range of $2.925 billion to $2.965 billion and adjusted EPS between $3.14 and $3.20.

Following the announcement of the results, Rosenblatt Securities analyst John McPeake reiterated a Buy rating on the stock with a price target of $156 (7.6% upside potential). The analyst expects the company to report EPS of $0.68 in the third quarter.

Overall, the stock has a Strong Buy consensus based on 4 Buys. The average Cadence Design Systems price target of $164 implies 13.1% upside potential to current levels. The company’s shares have gained 37.7% over the past year.

According to TipRanks’ Smart Score rating system, Cadence scores a “Perfect 10,” suggesting that the stock is likely to outperform market averages.

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