A Hold recommendation has recently been issued to software firm Cadence Design Systems, Inc. (CDNS) by Zacks senior information technology analyst Steve Biggs, CFA. Here's what his latest update had to say:
'Through acquisitions and in-house development, Cadence has assembled a comprehensive, end-to-end EDA solution that addresses most tasks in the design process. The company has released numerous solutions over the past year to help engineers deal with increasingly complex designs.
'However, demand for EDA [electronic design automation] software has been stagnant, which requires CDNS to continue gaining share in order to drive results. We are positive on CDNS' focus on new solutions, but have some concerns regarding R&D [research and development] spending in the semiconductor industry.
'We therefore believe that CDNS and its EDA peers should trade at a discount to the overall software universe. Synopsys (SNPS), another EDA company that we believe is somewhat better positioned, is currently trading at 24 times 2008 estimates. We reiterate our Hold rating and raise our target price to $23.00.
'Shares of CDNS are currently trading at 23.1x our 2007 earnings estimate and 3.7x our 2007 sales estimate. This P/E multiple is a discount to its industry mean and premium to S&P 500. Our target price represents a P/E multiple of 20.4x our 2008 EPS estimate of $1.13 and 3.6x our 2008 sales estimate. We believe this multiple is quite reasonable, representing a small discount to Synopsys.'
Read the full analyst report on CDNS.
Read the full analyst report on SNPS.
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