Cadence Design Systems, Inc. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

Last week, you might have seen that Cadence Design Systems, Inc. (NASDAQ:CDNS) released its full-year result to the market. The early response was not positive, with shares down 3.8% to US$296 in the past week. The result was positive overall - although revenues of US$4.1b were in line with what the analysts predicted, Cadence Design Systems surprised by delivering a statutory profit of US$3.82 per share, modestly greater than expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Cadence Design Systems

Taking into account the latest results, the most recent consensus for Cadence Design Systems from 15 analysts is for revenues of US$4.59b in 2024. If met, it would imply a meaningful 12% increase on its revenue over the past 12 months. Per-share earnings are expected to accumulate 8.2% to US$4.14. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$4.58b and earnings per share (EPS) of US$4.17 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

The consensus price target rose 8.1% to US$315despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of Cadence Design Systems' earnings by assigning a price premium. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Cadence Design Systems at US$350 per share, while the most bearish prices it at US$240. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 12% growth on an annualised basis. That is in line with its 13% annual growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 13% per year. It's clear that while Cadence Design Systems' revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Cadence Design Systems analysts - going out to 2026, and you can see them free on our platform here.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.