Cadence Design Systems Beats Fourth-Quarter Targets, Guides Higher For 2021

Electronic design software maker Cadence Design Systems (CDNS) late Monday beat Wall Street’s targets for the fourth quarter and guided higher for the current quarter and full year. CDNS stock rose in extended trading.


The San Jose, Calif.-based company earned an adjusted 83 cents a share on sales of $760 million in the December quarter. Analysts had predicted Cadence earnings of 74 cents a share on sales of $732 million. On a year-over-year basis, Cadence earnings rose 54% while sales increased 27%.

The report marked the company’s fourth straight quarter of accelerating sales and earnings growth.

For the current quarter, Cadence expects to earn an adjusted 74 cents a share, up 23%, on sales of $720 million, up 17%. That’s based on the midpoint of its guidance. Analysts were predicting earnings of 71 cents a share on sales of $703 million in the first quarter.

CDNS Stock Rises In After-Hours Trades

For 2021, Cadence sees adjusted earnings of $3 a share on sales of $2.98 billion, based on the midpoint of its outlook. Wall Street was forecasting adjusted earnings of $2.88 a share on sales of $2.83 billion. In 2020, Cadence earned an adjusted $2.80 a share on sales of $2.68 billion.

In after-hours trading on the stock market today, CDNS stock climbed 4.4%, near 139. During the regular session, CDNS stock fell 4.7% to 133.16 on a rough day for tech stocks.

“Generational industry drivers continue to fuel robust design activity,” Chief Executive Lip-Bu Tan said in a news release. “I am especially excited by the momentum in our system design and analysis segment as we further our Intelligent System Design strategy with the pending acquisition of Numeca.”

On Jan. 20, Cadence announced a deal to buy Numeca, a provider of computational fluid dynamics software, optimization and heat transfer technologies. It did not disclose the financial terms of the acquisition.

Cadence On IBD 50 Stock List

On Dec. 18, CDNS stock broke out of a flat base at a buy point of 127.60, according to IBD MarketSmith charts. A three-weeks-tight pattern in January offered another buy point. CDNS stock hit a record high 149.08 on Feb. 16.

Since its breakout, CDNS stock has twice pulled back to its 50-day moving average line, a key support level. It ended the regular session Monday just below its 50-day line, but rose above it in after-hours trading.

CDNS stock ranks No. 34 on the IBD 50 list of top-performing growth stocks.

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.


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