Cadence Design Systems Stock Falls On Disappointing Earnings Outlook

Cadence Design Systems (CDNS) late Monday beat Wall Street’s targets for the fourth quarter but missed views with its sales and earnings guidance for the current quarter. CDNS stock fell in extended trading.




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The San Jose, Calif.-based maker of electronic design automation software earned an adjusted $1.38 a share on sales of $1.07 billion in the December quarter. Analysts polled by FactSet had expected earnings of $1.34 a share on sales of $1.06 billion. On a year-over-year basis, Cadence earnings rose 44% while sales climbed 19%.

However, for the current quarter, Cadence forecast adjusted earnings of $1.12 a share on sales of $1 billion, based on the midpoint of its guidance. But analysts were looking for earnings of $1.37 a share on sales of $1.09 billion in the first quarter. In the year-earlier quarter, Cadence earned an adjusted $1.29 a share on sales of $1.02 billion.

But Cadence topped estimates with its full-year guidance. For 2024, Cadence predicted adjusted earnings of $5.92 a share on sales of $4.58 billion. Wall Street was modeling earnings of $5.87 a share on sales of $4.57 billion.

CDNS Stock Falls After Report

In after-hours trading on the stock market today, CDNS stock slid more than 6% to 287.07. During the regular session Monday, CDNS stock dropped 1.7% to close at 306.58. Earlier in the day, Cadence stock hit an all-time high 315.70.

“I’m thrilled about the opportunities ahead of us, particularly in AI (artificial intelligence) and 3D IC (integrated circuits),” Chief Executive Anirudh Devgan said in a news release. “And I look forward to continuing to drive our broad-based business momentum through our technology leadership.”

CDNS stock is on three IBD stock lists: Long-Term Leaders, Big Cap 20 and Tech Leaders.

Cadence Design Systems ranks third out of 12 stocks in IBD’s Computer Software-Design industry group, according to IBD Stock Checkup. CDNS stock has an IBD Composite Rating of 98 out of 99. The design software industry group ranks No. 28 out of 197 industry groups that IBD tracks.

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

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