Cadence trades higher after Stifel upgrades to Buy
narvikk
Stifel upgraded Cadence Design Systems' (NASDAQ:CDNS) stock to Buy from Hold and raised its price target on the shares to $300 from $210.
Stifel analysts said they believe that AI presents a virtuous cycle for the EDA companies wherein AI chip development will not just drive increased chip design starts but will also help with productivity enhancements to complex chip designs by moving EDA tools to emerging accelerated compute platforms along with AI-based toolkits.
The analysts anticipate this virtuous cycle to steer continued double-digit top-line growth, which could normalize at 12%+, longer term, at improving margin as the productivity improvements supported by AI-based tools are ultimately monetized.
From a valuation point, the analysts noted that, while Cadence stock is trading above average historical multiples, they anticipate shares to trade towards the higher end of the range as their revenue growth and margin expansion theory plays out.
The firm expects slightly in-line to slightly better Q2 results and a stronger H2 for Cadence.
CDNS +1.45% to $246 premarket July 20
More on Cadence 

Cadence's Dance With AI: A Ballet Of Tech Innovation And Market Domination
Cadence Design Systems: Valuation Is Too High