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Cadence Design
(NASDAQ:CDNS)
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Rating:70Outperform
Price Target:
$322.00
▼(-2.98% Downside)
Action:Reiterated
Date:07/28/26
The score is primarily supported by strong financial quality (high margins and robust free cash flow) and a constructive earnings update (raised guidance, record backlog, and continued demand signals). These positives are tempered by expensive valuation (high P/E with no dividend support) and weak near-term technicals (below 20/50-day averages), plus a balance-sheet watch item from higher leverage.
Positive Factors
Recurring revenue and switching costs
Cadence’s subscription-oriented licensing, maintenance, and support model creates recurring revenue and improves visibility. Its broad, embedded workflows also raise switching costs, supporting renewals and cross-selling as customers add engineers, capacity, and design tools.
Negative Factors
Higher leverage
The sharp increase in leverage reduces financial flexibility compared with Cadence’s earlier balance-sheet position. Although profitability remains strong, higher debt can constrain capital allocation and leave less capacity to absorb weaker growth, integration costs, or other business pressures.
Read all positive and negative factors
Positive Factors
Negative Factors
Recurring revenue and switching costs
Cadence’s subscription-oriented licensing, maintenance, and support model creates recurring revenue and improves visibility. Its broad, embedded workflows also raise switching costs, supporting renewals and cross-selling as customers add engineers, capacity, and design tools.
Read all positive factors
Cadence Design Key Performance Indicators (KPIs)
Any
Revenue by Geography
Breaks down revenue across different regions, revealing where Cadence Design is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Breaks down revenue across different regions, revealing where Cadence Design is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Data provided by:
The Fly
The FlyCadence Design (CDNS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$80.61B
Dividend YieldN/A
Average Volume (3M)2.36M
Price to Earnings (P/E)57.8
Beta (1Y)1.33
Revenue Growth14.70%
EPS Growth36.13%
CountryUS
Employees13,800
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)5.06
Shares Outstanding275,393,000
10 Day Avg. Volume2,457,858
30 Day Avg. Volume2,357,705
Financial Highlights & Ratios
PEG Ratio14.86
Price to Book (P/B)15.49
Price to Sales (P/S)16.01
P/FCF Ratio53.45
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$411.73Price Target Upside24.05% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering16
EPS Forecast (FY)8.14
Revenue Forecast (FY)$6.31B
Cadence Design Business Overview & Revenue Model
Company Description
Cadence Design Systems, Inc. operates globally, delivering a comprehensive suite of solutions that includes software, specialized hardware, professional services, and pre-designed integrated circuit (IC) building blocks. The company's robust funct...
How the Company Makes Money
Cadence primarily makes money by licensing software and delivering related support and services, supplemented by sales and licensing of semiconductor IP.
1) Software licensing (primary revenue stream)
- Time-based licenses (subscription/term): Ca...
Cadence Design Earnings Call Summary
Earnings Call Date:Jul 27, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Oct 26, 2026
Earnings Call Sentiment Positive
The call conveyed strong, broad-based operational and financial momentum: 24% Q2 revenue growth, record backlog ($8.1B), robust margins (45.5% non-GAAP in Q2), and notable early traction for agentic AI products and strategic partnerships (Intel, Samsung, TSMC). Management raised full-year guidance to ~19% revenue growth and reiterated confidence in multi-year TAM expansion from agentic AI. Near-term headwinds include deliberate investment spending in H2 (Hexagon integration, Intel engagement), hardware supply constraints, regulatory sensitivity around export controls, and the early-stage nature of agentic AI monetization, but these were framed as strategic investments to drive future growth.Positive Updates
Record Q2 Revenue and Strong YoY Growth
Total revenue of $1,584 million in Q2, up 24% year-over-year; company raised full-year guidance to imply ~19% revenue growth for 2026 (updated revenue range $6,260M–$6,340M).
Negative Updates
Early-Stage Monetization of Agentic AI
Agentic AI is described as a significant TAM expansion opportunity but remains early-stage; management cautioned they are not assuming a sudden step-function monetization and that much of the opportunity will develop over time.
Read all updates
Q2-2026 Updates
Positive
Negative
Record Q2 Revenue and Strong YoY Growth
Total revenue of $1,584 million in Q2, up 24% year-over-year; company raised full-year guidance to imply ~19% revenue growth for 2026 (updated revenue range $6,260M–$6,340M).
Read all positive updates
Company Guidance
Cadence raised its 2026 outlook, now guiding revenue of $6,260–$6,340 million (midpoint implies ~19% growth), GAAP operating margin 27.75%–28.75% and non‑GAAP operating margin 43.75%–44.75%, GAAP EPS $4.76–$4.86 and non‑GAAP EPS $8.05–$8.15, and operating cash flow of approximately $2.0 billion (with ~50% of free cash flow targeted for share repurchases), assuming current export control rules remain substantially similar; for Q3 it expects revenue of $1,595–$1,625 million, GAAP op margin 27.5%–28.5%, non‑GAAP op margin 43.5%–44.5%, GAAP EPS $1.11–$1.17 and non‑GAAP EPS $2.01–$2.07, and at the full‑year midpoint reiterated an expected non‑GAAP operating margin of ~44.25%, non‑GAAP EPS of $8.10, and ~$2 billion of operating cash flow.Cadence Design Financial Statement Overview
Summary
Income Statement
88
Very Positive
Balance Sheet
72
Positive
Cash Flow
84
Very Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 5.84B | 5.30B | 4.64B | 4.09B | 3.56B | 2.99B |
| Gross Profit | 5.17B | 4.57B | 3.99B | 3.65B | 3.19B | 2.68B |
| EBITDA | 2.18B | 1.87B | 1.67B | 1.46B | 1.20B | 916.12M |
| Net Income | 1.38B | 1.11B | 1.06B | 1.04B | 848.95M | 695.96M |
Balance Sheet | ||||||
| Total Assets | 12.08B | 10.15B | 8.97B | 5.67B | 5.14B | 4.39B |
| Cash, Cash Equivalents and Short-Term Investments | 1.44B | 3.00B | 2.78B | 1.14B | 886.82M | 1.09B |
| Total Debt | 2.48B | 2.48B | 2.59B | 764.41M | 887.41M | 454.71M |
| Total Liabilities | 5.22B | 4.68B | 4.30B | 2.27B | 2.39B | 1.65B |
| Stockholders Equity | 6.86B | 5.47B | 4.67B | 3.40B | 2.75B | 2.74B |
Cash Flow | ||||||
| Free Cash Flow | 1.68B | 1.59B | 1.12B | 1.25B | 1.12B | 1.03B |
| Operating Cash Flow | 1.85B | 1.73B | 1.26B | 1.35B | 1.24B | 1.10B |
| Investing Cash Flow | -2.35B | -460.52M | -837.12M | -412.25M | -738.63M | -292.95M |
| Financing Cash Flow | -859.84M | -948.98M | 1.24B | -803.57M | -657.05M | -643.79M |
Cadence Design Technical Analysis
Negative
331.90
Price Trends
341.64
Negative
351.49
Negative
327.13
Negative
Market Momentum
-8.43
Positive
31.05
Neutral
6.80
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CDNS, the sentiment is Negative. The current price of 331.9 is above the 20-day moving average (MA) of 322.26, below the 50-day MA of 341.64, and above the 200-day MA of 327.13, indicating a bearish trend. The MACD of -8.43 indicates Positive momentum. The RSI at 31.05 is Neutral, neither overbought nor oversold. The STOCH value of 6.80 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CDNS.
Cadence Design Risk Analysis
Cadence Design disclosed 43 risk factors in its most recent earnings report. Cadence Design reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Cadence Design Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $45.54B | 28.08 | 52.50% | ― | 18.70% | 59.41% | |
79 Outperform | $14.91B | 47.71 | 9.34% | ― | 8.19% | 6.70% | |
75 Outperform | $12.35B | 87.52 | 7.75% | ― | 21.08% | ― | |
70 Outperform | $80.61B | 57.85 | 22.88% | ― | 14.70% | 36.13% | |
68 Neutral | $116.87B | -106.03 | -53.56% | ― | 32.04% | 23.46% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
57 Neutral | $54.87B | -1.49 | -60.79% | 0.08% | 7.79% | -742.51% |
* Technology Sector Average
CDNS
Cadence Design
284.11
-77.66
-21.47%
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HUBS
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SNOW
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109.94
48.74%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.