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Cadence (CDNS) Gains 45% YTD: Will the Uptrend Continue?
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Cadence Design Systems (CDNS - Free Report) is witnessing strong momentum with its shares surging 45.2% year to date compared with the sub-industry’s growth of 34.6%. The company is a leading provider of products and tools that help customers to design electronic products.
The increase in share price is driven by continued strength across all segments owing to healthy demand for the company’s diversified product portfolio.
Acceleration in chip design activity and increasing system design complexity are driving demand for Cadence’s system design and verification solutions among semiconductor companies. Secular trends like 5G, increasing usage of hyperscale computing, and emerging technologies like artificial intelligence and machine learning are fueling digital transformation across various end-markets and boosting demand for advanced semiconductor chips.
Image Source: Zacks Investment Research
The company’s System Design & Analysis segment is benefiting from increasing presence in domains like 5G, aerospace & defense, and wireless and communications.
The launch of Virtuoso Studio and Allegro X AI will likely to help Cadence tap the growing demand for generative artificial intelligence solutions in digital, verification and systems areas. Apart from that, frequent product launches and strategic collaborations are expected to help CDNS sustain top-line growth.
Among existing products, Palladium and Protium (especially Z2 and X2) platforms are witnessing continued momentum. Cadence won 14 new clients and 30 repeat orders in the last reported quarter. Most deal wins came from clients in the Aerospace & Defense and automotive segments.
A strong cash position bodes well as it can help the company to pursue strategic acquisitions and other investments in growth initiatives. Cadence had cash and cash equivalents of approximately $917 million. Long-term debt was $648.3 million as of Mar 31, 2023.
Its shareholder-friendly initiatives are also noteworthy. CDNS repurchased shares worth approximately $125 million in the first quarter. In 2022, it repurchased shares worth $1.05 billion. Management expects to repurchase shares for approximately $125 million in the second quarter of 2023.
The Zacks Consensus Estimate for revenues for 2023 and 2024 has increased 0.6% and 4.7%, respectively, in the past 60 days, reflecting analysts’ optimism regarding the stock.
However, ongoing uncertainty prevailing over the global macroeconomic conditions, surging inflation and geopolitical instability in Europe remain concerns. Increasing expenses on product development amid stiff competition in the electronic design automation space are additional headwinds for this Zacks Rank #3 (Hold) stock.
The Zacks Consensus Estimate for Dropbox’s 2023 earnings has increased 10.1% in the past 60 days to $1.85 per share. The long-term earnings growth rate is anticipated to be 12.3%.
Dropbox’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 10.4%. Shares of DBX have gained 19.7% in the past year.
The Zacks Consensus Estimate for Badger Meter’s 2023 earnings has increased 4.7% in the past 60 days to $2.69 per share. Badger Meter’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 5.3%. Shares of BMI have soared 106.9% in the past year.
The Zacks Consensus Estimate for Blackbaud’s 2023 earnings has increased 9.3% in the past 60 days to $3.75 per share.
Blackbaud’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average surprise being 10.4%. Shares of BLKB have improved 31.1% in the past year.
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Cadence (CDNS) Gains 45% YTD: Will the Uptrend Continue?
Cadence Design Systems (CDNS - Free Report) is witnessing strong momentum with its shares surging 45.2% year to date compared with the sub-industry’s growth of 34.6%. The company is a leading provider of products and tools that help customers to design electronic products.
The increase in share price is driven by continued strength across all segments owing to healthy demand for the company’s diversified product portfolio.
Acceleration in chip design activity and increasing system design complexity are driving demand for Cadence’s system design and verification solutions among semiconductor companies. Secular trends like 5G, increasing usage of hyperscale computing, and emerging technologies like artificial intelligence and machine learning are fueling digital transformation across various end-markets and boosting demand for advanced semiconductor chips.
Image Source: Zacks Investment Research
The company’s System Design & Analysis segment is benefiting from increasing presence in domains like 5G, aerospace & defense, and wireless and communications.
The launch of Virtuoso Studio and Allegro X AI will likely to help Cadence tap the growing demand for generative artificial intelligence solutions in digital, verification and systems areas. Apart from that, frequent product launches and strategic collaborations are expected to help CDNS sustain top-line growth.
Among existing products, Palladium and Protium (especially Z2 and X2) platforms are witnessing continued momentum. Cadence won 14 new clients and 30 repeat orders in the last reported quarter. Most deal wins came from clients in the Aerospace & Defense and automotive segments.
A strong cash position bodes well as it can help the company to pursue strategic acquisitions and other investments in growth initiatives. Cadence had cash and cash equivalents of approximately $917 million. Long-term debt was $648.3 million as of Mar 31, 2023.
Its shareholder-friendly initiatives are also noteworthy. CDNS repurchased shares worth approximately $125 million in the first quarter. In 2022, it repurchased shares worth $1.05 billion. Management expects to repurchase shares for approximately $125 million in the second quarter of 2023.
The Zacks Consensus Estimate for revenues for 2023 and 2024 has increased 0.6% and 4.7%, respectively, in the past 60 days, reflecting analysts’ optimism regarding the stock.
However, ongoing uncertainty prevailing over the global macroeconomic conditions, surging inflation and geopolitical instability in Europe remain concerns. Increasing expenses on product development amid stiff competition in the electronic design automation space are additional headwinds for this Zacks Rank #3 (Hold) stock.
Stocks to Consider
Some better-ranked stocks in the broader technology space are Dropbox (DBX - Free Report) , Badger Meter (BMI - Free Report) and Blackbaud (BLKB - Free Report) . Dropbox and Badger Meter currently sport a Zacks Rank #1 (Strong Buy) while Blackbaud carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Dropbox’s 2023 earnings has increased 10.1% in the past 60 days to $1.85 per share. The long-term earnings growth rate is anticipated to be 12.3%.
Dropbox’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 10.4%. Shares of DBX have gained 19.7% in the past year.
The Zacks Consensus Estimate for Badger Meter’s 2023 earnings has increased 4.7% in the past 60 days to $2.69 per share.
Badger Meter’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 5.3%. Shares of BMI have soared 106.9% in the past year.
The Zacks Consensus Estimate for Blackbaud’s 2023 earnings has increased 9.3% in the past 60 days to $3.75 per share.
Blackbaud’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average surprise being 10.4%. Shares of BLKB have improved 31.1% in the past year.