Cadence Design Systems (NASDAQ:CDNS) Shares Gap Up on Better-Than-Expected Earnings

Shares of Cadence Design Systems, Inc. (NASDAQ:CDNS) gapped up before the market opened on Wednesday following a stronger than expected earnings report. The stock had previously closed at $283.46, but opened at $302.96. Cadence Design Systems shares last traded at $309.7170, with a volume of 1,871,822 shares traded.

The software maker reported $1.99 earnings per share (EPS) for the quarter, topping analysts’ consensus estimates of $1.91 by $0.08. Cadence Design Systems had a net margin of 20.93% and a return on equity of 30.04%. The company had revenue of $1.44 billion during the quarter, compared to analyst estimates of $1.42 billion. During the same period last year, the firm posted $1.88 EPS. Cadence Design Systems’s revenue for the quarter was up 6.2% compared to the same quarter last year. Cadence Design Systems has set its Q1 2026 guidance at 1.890-1.950 EPS and its FY 2026 guidance at 8.050-8.150 EPS.

Cadence Design Systems News Roundup

Here are the key news stories impacting Cadence Design Systems this week:

• Positive Sentiment: Q4 beat and raised guidance — Cadence reported Q4 revenue and EPS above expectations and issued Q1 and full‑year FY2026 guidance well ahead of Street models (Q1 adj. EPS 1.89–1.95; FY EPS 8.05–8.15), underpinning the rally. Cadence Reports Fourth Quarter and Fiscal Year 2025 Financial Results
• Positive Sentiment: AI and custom‑chip demand driving upside — Management emphasized AI-related demand across its portfolio and said the trend toward companies building custom chips should accelerate end market spending on Cadence tools. Cadence Design Systems Earnings Call Highlights AI Surge
• Positive Sentiment: Market coverage and analyst upgrades — Several firms raised/adjusted forecasts after the print (Needham reaffirmed buy with a high PT; Rosenblatt upgraded to buy), supporting investor confidence. These Analysts Revise Their Forecasts On Cadence Design Systems Following Q4 Results
• Neutral Sentiment: Mixed analyst target moves — Some shops trimmed price targets (Piper Sandler, Morgan Stanley nudged targets lower but kept constructive stances in places), creating a mix of support and caution. CDNS Price Target Commentary
• Neutral Sentiment: Options flow — Elevated put volume was reported (roughly 8,675 puts traded, ~172% above normal), which could reflect hedging or short‑term speculation rather than directional conviction.
• Negative Sentiment: Investor and insider signals — Data show notable insider selling activity and some analysts/notes (and commentary calling the stock “overpriced”) that remind investors valuation is high after the run. Cadence Design Systems (CDNS) stock rises on Q4 2025 Earnings
• Negative Sentiment: Contrarian takes and selective downgrades — Some research (e.g., Seeking Alpha commentary and an underperform from a firm earlier) argue the shares may be richly valued, which could cap upside if growth disappoints. Cadence: A Strong Company, But Overpriced

Analyst Upgrades and Downgrades

A number of analysts have recently commented on the stock. JPMorgan Chase & Co. boosted their target price on shares of Cadence Design Systems from $390.00 to $405.00 and gave the stock an “overweight” rating in a research note on Tuesday, October 28th. Stifel Nicolaus set a $395.00 target price on Cadence Design Systems in a report on Wednesday. Weiss Ratings reaffirmed a “hold (c)” rating on shares of Cadence Design Systems in a research note on Monday, December 29th. Morgan Stanley dropped their price target on Cadence Design Systems from $385.00 to $370.00 and set an “overweight” rating for the company in a research report on Wednesday. Finally, Robert W. Baird increased their price objective on Cadence Design Systems from $390.00 to $418.00 and gave the company an “outperform” rating in a research note on Tuesday, October 28th. Fifteen investment analysts have rated the stock with a Buy rating and three have assigned a Hold rating to the company. According to MarketBeat, Cadence Design Systems has an average rating of “Moderate Buy” and a consensus target price of $376.50.

Insider Activity at Cadence Design Systems

In other Cadence Design Systems news, CEO Anirudh Devgan sold 20,000 shares of the business’s stock in a transaction that occurred on Friday, December 5th. The stock was sold at an average price of $340.00, for a total value of $6,800,000.00. Following the sale, the chief executive officer owned 195,844 shares of the company’s stock, valued at $66,586,960. The trade was a 9.27% decrease in their ownership of the stock. The sale was disclosed in a document filed with the Securities & Exchange Commission, which is available through this link. Also, VP Paul Cunningham sold 1,000 shares of the business’s stock in a transaction dated Monday, February 2nd. The stock was sold at an average price of $295.09, for a total transaction of $295,090.00. Following the sale, the vice president owned 95,137 shares in the company, valued at $28,073,977.33. This trade represents a 1.04% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. Insiders have sold a total of 56,475 shares of company stock valued at $18,505,486 over the last quarter. 1.99% of the stock is owned by insiders.

Institutional Inflows and Outflows

Institutional investors and hedge funds have recently bought and sold shares of the stock. Vanguard Group Inc. boosted its stake in shares of Cadence Design Systems by 1.1% in the 4th quarter. Vanguard Group Inc. now owns 27,231,070 shares of the software maker’s stock valued at $8,511,888,000 after buying an additional 307,753 shares during the period. State Street Corp raised its holdings in Cadence Design Systems by 1.1% in the fourth quarter. State Street Corp now owns 12,603,368 shares of the software maker’s stock valued at $3,939,561,000 after acquiring an additional 135,206 shares in the last quarter. Jennison Associates LLC lifted its stake in Cadence Design Systems by 3.0% in the second quarter. Jennison Associates LLC now owns 9,338,102 shares of the software maker’s stock worth $2,877,536,000 after acquiring an additional 273,149 shares during the last quarter. Geode Capital Management LLC grew its holdings in Cadence Design Systems by 1.2% during the 4th quarter. Geode Capital Management LLC now owns 7,627,272 shares of the software maker’s stock worth $2,378,707,000 after acquiring an additional 92,152 shares in the last quarter. Finally, Massachusetts Financial Services Co. MA increased its position in shares of Cadence Design Systems by 16.0% in the 3rd quarter. Massachusetts Financial Services Co. MA now owns 5,314,407 shares of the software maker’s stock valued at $1,866,739,000 after purchasing an additional 731,788 shares during the last quarter. 84.85% of the stock is owned by institutional investors and hedge funds.

Cadence Design Systems Stock Performance

The company has a market capitalization of $83.02 billion, a PE ratio of 75.13, a P/E/G ratio of 3.15 and a beta of 1.01. The stock’s 50-day simple moving average is $309.22 and its 200 day simple moving average is $328.72. The company has a debt-to-equity ratio of 0.48, a quick ratio of 2.84 and a current ratio of 3.05.

Cadence Design Systems Company Profile

Cadence Design Systems, Inc (NASDAQ: CDNS) is a global provider of electronic design automation (EDA) software, hardware and intellectual property used to design and verify advanced semiconductor chips, systems-on-chip (SoCs), printed circuit boards (PCBs) and packaging. Headquartered in San Jose, California and founded in 1988, Cadence serves semiconductor companies, original equipment manufacturers and system designers across the globe, helping customers accelerate design cycles and manage the complexity of modern integrated systems.

The company’s offerings span software tools for digital, custom/analog and mixed-signal design, verification and signoff, as well as solutions for system-level modeling, thermal and signal integrity analysis, and PCB and package design.