CDNS Stock Forecast & Price Target

Cadence Design Systems experienced a significant backlog increase in Q4, rising to $6.8 billion from $5.6 billion in Q3, which provides strong visibility into future revenues and reflects a healthy pipeline heading into Q1. The company reported impressive Q4 revenue of $1.356 billion, marking a 27% year-over-year growth, supported by robust performance across Verification hardware, System Design and Analysis, and Intellectual Property sales. Moreover, Cadence maintained controlled expenses, resulting in a solid operating margin of 46%, underscoring the company's effective management strategy alongside its growth trajectory.

Cadence Design Systems faces a negative outlook due to a projected deceleration in revenue growth, with guidance for 2025 at 11.6%, falling short of the consensus estimate of 13%. This is compounded by anticipated weakness in bookings and backlog, especially in the first half of 2025, suggesting a challenging near-term trajectory. Additionally, expected declines in IP revenue, particularly linked to an Intel downturn, further undermine confidence in Cadence's growth prospects.