Expecting Good Report/Outlook from Cadence Designs (CDNS) - Northland Capital

Northland Capital Markets analyst, Gus Richard, expects a strong quarter for Cadence Design Systems (NASDAQ: CDNS). He believes it is picking up share at 14nm, wining incremental business when companies merge, and its new emulation tool should drive the majority of expected revenue growth in CY16.

Key Points:

-Channel feedback has indicated that CDNS has strong momentum in its core digital design tools

-Consolidation is a concern but so far it has benefited CDNS. For example, when AVGO purchased LSI, CDNS’ share at the combined company increased relative to the two separate companies

CDNS announced its new emulation platform in Q4, Palladium Z1. Its older products were capable of efficiently emulating 28nm design, but the platform didn’t have the performance or the throughput to handle 14nm design. The Z1 provides this capability. CDNS started to recognize revenue for the Z1 in Q4. The addition of the Z1 could drive revenue from emulation to grow by $50M to $75M in CY16 or a total of $200M to $275M.

No change to Outperform rating or PT of $27.50

For an analyst ratings summary and ratings history on Cadence Designs click here. For more ratings news on Cadence Designs click here.

Shares of Cadence Designs closed at $19.00 yesterday.

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