CDNS
Cadence Design Systems, Inc.$303.36
Unclear
Target $309.18
Report: Mar 07, 2026Technology • Software - Application • Mature CompounderSnapshot
Decision-first overview with recommendation, valuation anchor, and current setup.
Company Overview
Research Snapshot
Price History
Pelican View
Current$303.36+1.9%
Rec: UnclearConviction: High
Entry Target
$237.83
(22% below current)
Fair Value
$309.18
(2% above current)
Stop Loss
$189.30
(38% below current)
Position Size
Half
Time Horizon
Long-Term
Key Metrics
Live Snapshot
Market Data
52 Week High$376.45
52 Week Low$221.56
Avg. 3 Month Volume2.51M
Efficiency
LTM Gross Margin86.4%
LTM EBITDA Margin35.4%
LTM EBIT Margin30.9%
LTM Operating Margin28.2%
LTM ROA11.6%
LTM ROE21.7%
LTM ROIC36.4%
LTM ROCE20.5%
Capital Structure
Market Cap (MM)$75.8B
Enterprise Value (MM)$75.2B
Shares Outstanding270.92M
Total Debt (MM)$2.48B
Cash & Equivalents (MM)$3.00B
LTM Net Debt (MM)$-521.17M
LTM Net Debt/EBITDA-0.3x
Growth
TTM Rev. Growth14.1%
Last 3-Yr Rev. CAGR14.1%
Last 3-Yr EBITDA CAGR15.9%
Last 3-Yr EPS CAGR9.4%
Valuation
Street Target Price$377.88
LTM EV/Revenue14.2x
LTM EV/Gross Profit16.4x
LTM EV/EBIT45.9x
LTM EV/EBITDA40.2x
LTM P/E68.3x
LTM EV/FCF47.4x
LTM P/FCF47.7x
LTM P/TB11.3x
LTM P/B13.8x
Dividend Yield0.0%
Payout Ratio0.0%
Executive SummarySituation: Current price is $303.36 versus fair value $309.18 (1.9% expected return), and valuation confidence is stable. Debate: Bull case depends on Monetization of Agentic AI (ChipStack). Bear case centers on Geopolitical and Export Control Risk. Conclusion: Recommendation is Unclear; maintain no position until reliability and catalyst evidence improve.
Bull Case
1. AI-driven design complexity is a generational tailwind that increases tool usage and pricing power. 2. The $7.8 billion backlog provides 67% visibility into 2026 revenue. 3. High switching costs and a 36.4% ROIC demonstrate a widening competitive moat.
Bear Case
1. Lofty valuation at 74.1x P/E leaves no room for execution errors. 2. China export controls and geopolitical tension create a persistent revenue headwind. 3. Hardware mix shift is diluting gross margins, which fell 320 basis points over the last two years.
Key Catalysts
Mid-Term (6-18 months)Impact: High
Monetization of Agentic AI (ChipStack). Successful transition to usage-based pricing for AI 'Super Agents' would validate the company's pric...
Near-Term (0-6 months)Impact: Moderate
Integration of Hexagon D&E. Realizing the projected $160 million in incremental revenue from the $3.2 billion Hexagon acquisition would prov...
Long-Term (18+ months)Impact: Moderate
Cadence is currently relevant due to its record $7.8 billion backlog and the recent closing of the $3.2 billion Hexagon acquisition, which m...
Primary Risks
Concern: High
Geopolitical and Export Control Risk. Further U.S. restrictions on EDA exports to China could permanently impair a key growth market and lea...
Concern: Medium
Margin Dilution from Hardware Mix. A continued shift toward lower-margin hardware emulation systems could prevent the company from achieving...
Concern: Medium
Stewardship is strong, bolstered by a board with deep financial and semiconductor expertise. Director Ita Brennan (former Arista CFO) provid...
Recent Activity
2026-02-18SEC Filing (8-K)
+7.60%Cadence Design Systems reported Q4 2025 and full-year 2025 financial results with record backlog of $7.8 billion.
2025-07-29SEC Filing (8-K)
+9.74%Cadence Design Systems reported Q2 2025 financial results with revenue of $1.275 billion, exceeding guidance.
2025-07-03SEC Filing (8-K)
+5.10%Cadence announced BIS rescinded license requirements for EDA software exports to China.
2025-04-29SEC Filing (8-K)
+5.77%Cadence reported Q1 2025 financial results exceeding guidance on all key metrics.
2025-04-24SEC Filing (SC 13G/A)
+6.16%BlackRock, Inc. filed 18th Amendment to Schedule 13G reporting 8.0% beneficial ownership of Cadence common stock.
Valuation Table
9.8/10Decision Grade
Scenario Range
$252
Bear
$329
Base
$373
Bull
$303