Skip to main content

Market Overview

DA Davidson: Cadence Design's Share Price Out Of Sync With Strong Business Activity

DA Davidson: Cadence Design's Share Price Out Of Sync With Strong Business Activity

Cadence Design Systems Inc (NASDAQ: CDNS) shares have pulled back 20 percent since late January, prompting a D.A. Davidson analyst to observe that the company's business strength is not reflected in its weak stock performance.

The Analyst

Aanalyst Thomas Diffely upgraded shares of Cadence Design from Neutral to Buy and reiterated a 12-18 month price target of $45.

The Thesis

Design activity for Cadence Design as well as the broader engineering design automation, or EDA, industry remains at elevated levels, Diffely said in a Thursday note, citing D.A. Davidson's checks. 

The company's long-term drivers continue to strengthen, as it benefits from a broadening customer base, a continued ramp in complexity and the new wave of computing, the analyst said. 

The impact of the new ASC 606 revenue recognition rules is estimated by D.A. Davidson to be a $40-million hit to 2018 revenue and a $25-million negative in 2019. The previous uncertainty over the ASC 606 is well-understood and is fully reflected in consensus estimates, Diffely said. 

"Based on continued strong design activity, emerging growth drivers and management's history of conservative annual guidance, we believe current consensus estimates could prove to be conservative." 

With the recent weakness, the shares now no longer trade at a meaningful premium to Synopsys, Inc. (NASDAQ: SNPS), while the company continues to gain share, largely from Mentor Graphics, Diffely said. 

D.A. Davidson remains bullish on both near- and long-term EDA prospects.

The Price Action

Cadence Design stock has gained about 22 percent over the past year, although it has shed about 10 percent in the year-to-date period.

Related Links:

KeyBanc Raises Autodesk Price Target, Estimates After Q4 Print

Autodesk, SCANA, And 3 Other Stocks With Clear Trading Opportunities This Week

Photo courtesy of Cadence Design. 

Latest Ratings for CDNS

Feb 2021RBC CapitalMaintainsOutperform
Feb 2021Credit SuisseMaintainsNeutral
Feb 2021NeedhamMaintainsBuy

View More Analyst Ratings for CDNS
View the Latest Analyst Ratings


Related Articles (CDNS)

View Comments and Join the Discussion!

Posted-In: DA Davidson Thomas DiffelyAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga

Latest Ratings

OSPNSidoti & Co.Upgrades39.0
PLTSidoti & Co.Upgrades48.0
LRCXArgus ResearchMaintains725.0
ROSTLoop CapitalMaintains145.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at