Shares of Cadence Design Systems Inc (NASDAQ:CDNS) rallied in early trading on Friday ahead of the company's first-quarter results, scheduled to be reported on Monday, April 27.
While the company is likely to report total revenues ahead of expectations, its operating margin and earnings could miss consensus estimates, according to Rosenblatt Securities.
The Cadence Design Systems Analyst: Analyst Blair Abernethy reiterated a Buy rating and price target of $360.
The Cadence Design Systems Thesis: The company is likely to report total revenue of $1.452 billion, up 16.9% year-on-year but missing consensus of $1.446 billion, Abernethy said in the note.
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Cadence Design Systems could generate Hardware-driven Verification growth of around 16% year-on-year, which is commendable given tough comps of around 23% growth in the same quarter in 2025, he added.
The analyst expects the company's non-GAAP operating margin to have remained stable in the first quarter, at 43%, below consensus of 44%. He projected non-GAAP earnings of $1.90 per share, below consensus of $1.92 per share.
"We believe Cadence's broad-based growth drivers in digital chip and analog/PCB electronics design engineering were stable in Q1," Abernethy further wrote.
Projections For 2026: Cadence Design Systems acquired Swedish technology firm Hexagon's (OTC:HXGBY) simulation business for around $3.2 billion, using 70% cash and 30% in shares, the analyst stated. He added that the acquisition could add around $160 million in revenues in 2026, boosting Simulation to nearly 20% of the company's total revenues.
Abernethy expects Cadence Design Systems' total revenue growth to accelerate to 16% in 2026, from 14% in the previous year. He expects earnings to grow around 11.5% to $7.96 per share.
Cadence Design Systems has provided details of its product strategy, which aims at shortening chip development cycles "to better align with the much faster AI model innovation cycles," the analyst stated.
CDNS Price Action: Cadence Design Systems shares were up 3.93% at $326.67 at the time of publication on Friday, according to Benzinga Pro data.
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