CDNS
Cadence Design Systems, Inc.
Information Technology / Electronic Design Automation / San Jose, CA
AnalystScope signal
Hold
Scheduled quote
$340
Base fair value
$327
Bear / base / bull
$261 / $327 / $366
Upside / downside
-4.0 downside
Confidence
Medium
Research updated Jun 13, 2026
Daily scheduled refresh as of Aug 1, 2026, 6:05 AM UTC. Fresh through Aug 2, 2026, 6:05 AM UTC.
Informational research only. Not personalized investment advice.
Investment summary
Current view and thesis
Cadence Design Systems, Inc. is added as a high-quality large-cap coverage candidate with high-margin EDA software and system-design tools tied to semiconductor complexity. The initial AnalystScope view weighs rising design complexity across AI, advanced packaging, and systems design against a premium quality multiple captures much of the defensiveness, keeping the rating restrained until the model has more live refresh history.
Fair value $327 vs. current $340 (-4.0 downside). Current base fair value is $327 versus $340, implying -4.0 downside.
Key drivers
Advanced semiconductor complexity raises the value of design automation.
Recurring software demand supports durable margins.
System-design breadth can expand use cases beyond traditional chip design.
Key risks
Semiconductor customer spending can slow with design-cycle pauses.
Valuation could compress if growth normalizes.
Competition remains intense in key EDA categories.
What would change the view
A clearer evidence base around rising design complexity across ai, advanced packaging, and systems design would improve confidence.
A deterioration in software scale supports durable operating and free-cash-flow margins would reduce support for the current fair value.
A wider gap between price and normalized cash-flow support would make the rating harder to defend.
Valuation
Price, range, and method support
Base case $327 / -4.0 downside / medium confidence
Price vs fair value
-3.8%
Model-implied return
Scheduled quote
$340
Fair value
$327
Valuation method stack
Weighted fair value $327
Published method weights
DCF (Base)
$332 | 45%
NTM P/E Multiple
$322 | 35%
EV/EBITDA Cross-check
$322 | 20%
| Case / method | Value | Weight / support |
|---|---|---|
| DCF (Base) | $332 | 45% |
| NTM P/E Multiple | $322 | 35% |
| EV/EBITDA Cross-check | $322 | 20% |
| Bear case | $261 | Supportive |
| Base case | $327 | Supportive |
| Bull case | $366 | Mixed |
Fundamental analysis
Reported evidence and normalized model base
Normalized annual basis: FY2025
Normalized figures are AnalystScope's annual valuation model base.
| Normalized metric | Latest value | Growth / margin context |
|---|---|---|
| Revenue | $5.2B | +13.0% YoY |
| Operating income | $1.7B | 32.7% margin |
| Net income | $1.4B | EPS proxy $5.11 |
| Free cash flow | $1.7B | 32.7% margin |
| EBITDA | $1.9B | 36.5% margin |
| Net cash / (debt) | $1.0B | +19.2% of revenue |
| Metric | Reported | AnalystScope normalized | Basis note |
|---|---|---|---|
| Revenue (TTM) | $5.3B | $5.2B | Model revenue smooths short-term demand, timing, and segment-mix volatility rather than treating the latest period as a straight-line run rate. |
| Operating Margin | 28.2% | 32.7% | Margin input uses a durable operating base and tempers one-off restructuring, mix, and cycle effects. |
| FCF (TTM) | $1.6B | $1.7B | FCF input normalizes working-capital and capital-spending timing so cash conversion is not over-read from one period. |
| Net Cash / (Debt) | $1.1B | $1.0B | Balance-sheet input uses a conservative net cash / debt posture without assuming all cash is excess or fully distributable. |
Fundamental snapshot
FY2025
Normalized annual model base
Revenue
+13.0% YoY
$5.2B
Op. margin
+2.3% pts
32.7%
FCF margin
+0.1% pts
32.7%
Revenue + margin trend
Annual normalized model-base history.
Revenue
Operating margin
AnalystScope annual model-base statements in USD across FY2023 | FY2024 | FY2025.
Income statement
| Line item | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| Revenue | $4.1B | $4.6B | $5.2B |
| Gross Profit | $3.6B | $4.1B | $4.6B |
| Operating Income | $1.2B | $1.4B | $1.7B |
| EBITDA | $1.3B | $1.5B | $1.9B |
| Net Income | $1.0B | $1.2B | $1.4B |
Balance sheet
| Line item | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| Cash & Investments | $1.1B | $1.3B | $1.6B |
| Total Debt | $600.0M | $600.0M | $600.0M |
| Net Cash / (Debt) | $500.0M | $700.0M | $1.0B |
| Total Assets | $6.2B | $7.0B | $7.8B |
| Total Liabilities | $3.0B | $3.2B | $3.4B |
| Shareholders' Equity | $3.2B | $3.8B | $4.4B |
Cash flow
| Line item | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| Operating Cash Flow | $1.4B | $1.6B | $1.8B |
| Depreciation & Amortization | $100.0M | $100.0M | $200.0M |
| Capital Expenditures | ($100.0M) | ($100.0M) | ($100.0M) |
| Free Cash Flow | $1.3B | $1.5B | $1.7B |
Model assumptions
Base-case inputs and sensitivity
Published AnalystScope assumptions; private edits do not change this base case.
Revenue CAGR (5Y)
11.0%
+/- 1.0% => +/-$9/sh
Why this level: This is AnalystScope's base-case growth assumption, not a guarantee. It sits below the latest FY model-base revenue pace (2025.0%), so the model does not extend current strength too far into the outer years. Current company context: Recurring software demand supports durable margins.
Terminal Growth
3.0%
+/- 0.5% => +/-$7/sh
Why this level: This is AnalystScope's mature long-run growth assumption, not a perpetual hypergrowth claim. At 3.0%, it sits well below the 11.0% five-year revenue CAGR, so the model steps down from the explicit forecast period to a steadier long-run pace. For Cadence Design Systems, Inc., that means a durable franchise can keep compounding after year five without assuming today's faster growth profile lasts indefinitely.
WACC
8.6%
+/- 0.5% => -$12/sh
Why this level: This is AnalystScope's base-case cost-of-capital judgment, not a precise CAPM output. It reflects the current rates backdrop, equity risk premium, and the company's balance-sheet posture. Modest net cash with high recurring software cash conversion
Operating Margin (Year 5)
34.0%
+/- 100 bps => +/-$7/sh
Why this level: This is AnalystScope's base-case margin view, not a promise of straight-line expansion. It keeps year-five margins close to today's model-base operating margin (32.7%), which implies the current margin structure is broadly durable. Margin input uses a durable operating base and tempers one-off restructuring, mix, and cycle effects.
Sensitivity drivers
Revenue CAGR (5Y)
11.0%
+/- 1.0% => +/-$9/sh
Terminal Growth
3.0%
+/- 0.5% => +/-$7/sh
WACC
8.6%
+/- 0.5% => -$12/sh
Operating Margin (Year 5)
34.0%
+/- 100 bps => +/-$7/sh
Confidence
Medium
Method outputs are tightly grouped at +3.1% dispersion.
Why the model view could be wrong
Semiconductor customer spending can slow with design-cycle pauses.
Valuation could compress if growth normalizes.
Competition remains intense in key EDA categories.
Private analysis
Test your own assumptions in Scenario Builder
Private scenarios remain separate from AnalystScope's published base case.
Private workspace
Scenario Builder
Private scenario sandbox
This is a private modelling layer, not the public AnalystScope base case or printable snapshot. It keeps the public base case as the anchor, applies bounded changes to the four core valuation inputs, and updates your scenario fair-value estimate immediately.
Saved scenarios currently stay local to this browser for CDNS. Base-case rationale remains in the public assumptions section above. Your scenario output reprices the published valuation methods from projected operating anchors when those anchors are available, while keeping market-multiple and capital-structure assumptions anchored to the AnalystScope framework.
Editable assumptions
Adjust your scenario inputs within the displayed plausible range for this company. The workbench stays anchored to the public AnalystScope base case.
This is a bounded scenario tool, not a free-form spreadsheet. Values outside the displayed range snap back to the nearest allowed value when you leave the field.
Matches the published AnalystScope base case.
Revenue CAGR (5Y)
Public AnalystScope base case: 11.0% | +/- 1.0% => +/-$9/sh
Allowed range: 5.0% to 17.0%
Terminal Growth
Public AnalystScope base case: 3.0% | +/- 0.5% => +/-$7/sh
Allowed range: 1.5% to 4.5%
WACC
Public AnalystScope base case: 8.6% | +/- 0.5% => -$12/sh
Allowed range: 6.6% to 10.6%
Operating Margin (Year 5)
Public AnalystScope base case: 34.0% | +/- 100 bps => +/-$7/sh
Allowed range: 26.0% to 42.0%
Saved private scenarios
Save up to 5 named scenarios for CDNS. These are your scenarios: they never overwrite the public AnalystScope base case and remain clearly separate from public research.
Checking private workspace session...
Private scenario note
Keep a short thesis, main risk, or why this case differs from the published base case.
0 / 280
Notes stay local to this browser unless you sign in to the private workspace, and they never appear as published AnalystScope research.
No private scenarios saved yet. Make a change to the published base case, then save a named scenario here.
Published base case
Fair value
$327
Upside / Downside
-4.0 downside
Model signal
Hold
Published base-case output
Scenario output reprices the published DCF and multiple methods from projected year-5 revenue, margin, free cash flow, EBITDA, and EPS anchors. Market multiples and capital structure stay anchored to the published base framework.
Fair value
$327
$0/sh vs published base case
Upside / Downside
-4.0 downside
+0.0 pts vs published base case
Model signal
Hold
Unchanged versus the published base case.
Method movement inside the scenario
This breakdown shows what moved inside the published valuation framework when you edit the scenario. The published AnalystScope base case stays anchored, and any method without a clean projected anchor remains pinned to that framework.
Method rows below reflect the current edited scenario state, not just the saved scenario snapshots.
Influence tags are directional rather than exact attribution. They estimate which edited input is moving each method most by reverting one assumption at a time while the other edited inputs stay in place.
| Method | Published base | Edited scenario | Delta | How it moved / main drivers |
|---|---|---|---|---|
DCF (Base) DCF-style | 45% weight | $332 | $332 | $0/sh | Base-aligned This method is supported by the model-native bridge and currently stays aligned with the published base case. Edited inputs are largely offsetting each other, so this row stays close to the published base case. |
NTM P/E Multiple P/E-style | 35% weight | $322 | $322 | $0/sh | Base-aligned This method is supported by the model-native bridge and currently stays aligned with the published base case. Edited inputs are largely offsetting each other, so this row stays close to the published base case. |
EV/EBITDA Cross-check EV-based multiple | 20% weight | $322 | $322 | $0/sh | Base-aligned This method is supported by the model-native bridge and currently stays aligned with the published base case. Edited inputs are largely offsetting each other, so this row stays close to the published base case. |
Weighted fair value Published framework result | Published framework result | $327 | $327 | -$1/sh | Moved Combines the repriced method outputs using the published AnalystScope weights. No single edited assumption is dominating this move in a material way. |
Published base case vs private scenarios
Compare the published AnalystScope base case against your saved private scenarios in one view. Saved scenarios remain local to this browser, and the table below reflects saved snapshots rather than any unsaved edits currently sitting in the editor.
Fair-value comparisons use the same workbench recalculation path as the editor above.
Published base case stays pinned as the anchor row.
| Scenario | Revenue CAGR (5Y) | Terminal Growth | WACC | Op. Margin (Y5) | Fair Value | Upside / Downside | Model Signal | Delta vs Base | Action |
|---|---|---|---|---|---|---|---|---|---|
AnalystScope base case PublishedOfficial AnalystScope anchor row. | 11.0% | 3.0% | 8.6% | 34.0% | $327 | -4.0 downside | Hold | Published anchor |
Supporting research
Quality, normalization, and monitoring evidence
Annual model base: FY2023 | FY2024 | FY2025
Thesis scorecard
Growth
Moderaterising design complexity across AI, advanced packaging, and systems design
Profitability
Strongsoftware scale supports durable operating and free-cash-flow margins
Balance sheet
Moderatenet cash and strong cash conversion keep financial risk low
Valuation
Moderatea premium quality multiple captures much of the defensiveness
Execution / Resilience
Moderatesemiconductor design-cycle timing and premium valuation are the central risks
Current source status
Quote: Daily scheduled refresh as of Aug 1, 2026, 6:05 AM UTC. Fresh through Aug 2, 2026, 6:05 AM UTC.
Reported fundamentals: Fundamentals refreshed 1 Aug 2026, 16:00 UTC. Fresh through 2 Aug 2026, 04:00 UTC.
Latest filing: 10-Q filed Jul 29, 2026 | Reporting period Jun 30, 2026. Filing refreshed Aug 1, 2026, 4:26 PM UTC. Fresh through Aug 2, 2026, 4:26 AM UTC.
Annual model-base income-statement, cash-flow, and balance-sheet metrics, plus cross-statement quality relationships with compact prior-FY direction cues, derived from the curated statement backbone.
Basis: FY2023 | FY2024 | FY2025. Live reported fundamentals remain available in the reconciliation section.
Operating and cash-flow trends
Revenue growth (1Y)
+13.0%
Gross margin
88.5%
Operating margin
32.7%
Operating margin change vs prior FY
+2.3 pts
EBITDA margin
36.5%
EBITDA margin change vs prior FY
+3.9 pts
Operating income growth (1Y)
+21.4%
Net margin
26.9%
FCF margin
32.7%
FCF margin change vs prior FY
+0.1 pts
FCF growth (1Y)
+13.3%
Balance sheet quality
Cash & investments
$1.6B
Total debt
$600.0M
Net cash / (debt)
Net cash $1.0B
Net cash / (debt) as % of revenue
Net cash 19.2% of revenue
Liabilities / assets
vs FY2024 (-2.1 pts)
43.6%
Cross-statement quality
Gross-to-operating spread
55.8 pts
Operating cash flow / net income
vs FY2024 (-0.0x)
1.3x
Operating cash flow / EBITDA
vs FY2024 (-0.1x)
0.9x
Free cash flow / net income
vs FY2024 (-0.0x)
1.2x
CapEx as % of revenue
vs FY2024 (-0.3 pts)
1.9%
CapEx as % of operating cash flow
vs FY2024 (-0.7 pts)
5.6%
CapEx / D&A
vs FY2024 (-0.5x)
0.5x
Cash & investments / total debt
vs FY2024 (+0.5x)
2.7x
Shareholders' equity as % of revenue
84.6%
Asset turnover
vs FY2024 (+0.0x)
0.7x
Compact model-base diagnostics for analyst triage, highlighting where the durable valuation base is diverging most clearly from the latest reported picture.
Revenue momentum
Stable+13.0% latest 1Y growth
vs +12.2% prior 1Y
Operating margin trend
Improving32.7% latest margin
+226 bps vs prior FY
FCF margin trend
Stable32.7% latest FCF margin
+8 bps vs prior FY
Balance-sheet posture
StrengtheningNet cash 19.2% of revenue
vs Net cash 15.2% of revenue prior FY
How to read this
Reported = the latest company-reported figure. Model base = AnalystScope's comparable operating base used for valuation and thesis work. It may include standardization, conservative balance-sheet treatment, working-capital cleanup, and through-cycle adjustments when current reported numbers do not look durable.
This is an analyst model base, not a claim of perfect adjusted truth. Larger gaps can reflect deliberate cyclical or base-case adjustments, not just light accounting cleanup.
Why the model base differs
This initial coverage setup keeps valuation tied to durable normalized fundamentals and avoids letting a single recent print dominate the public view.
Rows are sorted by largest comparable adjustment first.
| Metric | Model base | Live reported | Variance vs reported | Adjustment size | Why lower / higher? |
|---|---|---|---|---|---|
FCF (TTM) | $1.7B FY2025 model base | $1.6B Live reported TTM | +$100.0M / +6% | Close to reported | Model base is higher than live reported because the model does not assume the latest cash-flow drag is fully durable. It normalizes working-capital and capital-spending timing so cash conversion is not over-read from one period. |
Operating Margin | 32.7% FY2025 model base | 28.2% Live reported margin | +4.5 pts | Moderate adjustment | Model base is higher than live reported because the model does not assume the latest reported margin pressure is the durable earnings base. It uses a durable operating base and tempers one-off restructuring, mix, and cycle effects. |
Revenue (TTM) | $5.2B FY2025 model base | $5.3B Live reported TTM | -$100.0M / -2% | Close to reported | Model base is lower than live reported because the thesis does not carry the current revenue run-rate straight into the durable operating base. It smooths short-term demand, timing, and segment-mix volatility rather than treating the latest period as a straight-line run rate. |
Net Cash / (Debt) | $1.0B FY2025 model base | $1.1B Live reported balance sheet | -$100.0M / -2% of revenue | Close to reported | Model base is more conservative than the live reported balance-sheet figure. It balance-sheet input uses a conservative net cash / debt posture without assuming all cash is excess or fully distributable. |
Near-term catalysts
Next quarterly update and management commentary on demand quality.
Reported margin, cash-flow conversion, and balance-sheet movement versus the normalized model base.
Daily scheduled quote refreshes that tighten the current price-versus-fair-value read.
What we are watching
Backlog and renewal commentary.
System-design expansion and AI design-tool adoption.
Margin durability as R&D investment continues.
| Date | Event | Published rating | Note |
|---|---|---|---|
| Jun 13, 2026 | New | Hold | Started coverage with a Hold view on high-quality EDA exposure versus premium valuation. |