Here's Why Analysts Were Impressed Post Cadence Design Systems' Q1 Performance

Cadence Design Systems, Inc CDNS impressed analysts post Q1 beat.
Baird reiterated Outperform rating on Cadence, adjudging it as a top idea.
All business groups saw strength, with recurring revenues increasing 19% YoY (led by Digital and System Design) and upfront revenues rising 49% YoY.
FY22 outlook raised given 1Q strength, upside in 2Q, and favorable backlog development.
Rosenblatt saw Cadence reported Q1 results beating its estimate by~5% with better margins, as demand for EDA, IP and simulation software remained very healthy.
Rosenblatt wrote Cadence again demonstrated strong demand across its product lines, including continued traction with new products, such as AI-driven Cerebrus Intelligent Chip Explorer and the updated hardware offering.
Backlog grew 42% y-o-y to $5.1b, providing ~75% revenue visibility across FY22.
Rosenblatt marginally increased its estimates and maintained its target price of $170.
Needham saw Cadence deliver another beat-and-raise quarter, proving that the company can accelerate growth and expand margins against macro headwinds, e.g., inflation and semiconductor cycles, weighing on many software and semiconductor stocks.
Needham's recent conversations with clients indicate a growing interest in EDA stocks like CDNS, increasingly seen as a potential hedge against a recession and the semiconductor cycle.
CDNS' strong 1Q22 print might have just provided the proof point.
Needham raised its estimates and price target to $193 and reiterated Buy.
Price Action: CDNS shares traded higher by 0.93% at $152.50 on the last check Tuesday.

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