Why Needham Says This Semiconductor Stock Will Catch Up With Synopsys

Cadence Design Systems Inc CDNS is “a rare software play” in the semiconductor industry and is poised to benefit from accelerated growth in the Electronic Design Automation (EDA)/Internet Protocol industry, according to Needham.

The Cadence Design Systems Analyst: Charles Shi initiated coverage of Cadence Design Systems with a Buy rating and $183 price target.

The Cadence Design Systems Takeaways: Following a downturn since September, the share price represents an entry point ahead of the company’s third-quarter earnings call, Shi said in the initiation note.

The analyst said he expects EDA to outperform the semiconductor industry, with around 10%  growth over the next few years. Following the current market leader Synopsys, Inc. SNPS, Cadence Design Systems is likely to “publicly commit to ~10% EDA growth on either its 3Q21 or 4Q21 earnings call,” he said. 

“We believe Cadence will execute and outperform in coming years,” Shi further wrote.

CDNS Price Action: Shares of Cadence Design Systems were trading 1.46% higher at $161.15 midday Wednesday.