Cadence Design Systems (NASDAQ:CDNS) carried momentum into the fourth quarter following third quarter 2024 financial results that once again beat estimates.

Cadence climbed as high as 8% during premarket trading on Tuesday.

"The early signs are that Q4 bookings will be strong, much as hoped, and we expect the company to revive at least the recent backlog highs," said Morgan Stanley analysts, led by Lee Simpson, in a note. "The company is also seeing momentum with AI-enabled tools, including work GenAI solutions. CDNS, as expected, saw continued traction with its new Z3/X3 products, which we expect will support growth in hardware into 2025 and eventually better margins."

Morgan Stanley maintains an Overweight rating on the stock and its $280 price target.

Meanwhile, J.P. Morgan assigned Cadence a hefty 12-month price target of $300.

"We also believe the team is not being impacted by the recent restructuring/headcount reductions at Intel (INTC) or Samsung (OTCPK:SSNLF)," said J.P. Morgan analysts Harlan Sur and Peter Peng. "More importantly, with a strong renewal pipeline, IP programs, and hardware upgrade cycle, the team is expecting strong bookings in 4Q (up 2.5x Q/Q) and we estimate overall backlog to grow in CY24 for the 7th consecutive year (to ~$6.2B)."

Following the positive results and outlook, KeyBanc named Cadence as one of its "favorite early ideas for 2025."

While backlog contracted by $400M quarter over quarter to $5.6B, KeyBanc noted the bookings pipeline commentary was "exceptionally strong," which points to a healthy bounce back in backlog for the fourth quarter, the investment firm noted.

However, Oppenheimer came away from the call with tempered expectations. It maintained its Underperform rating and a $225 12-to-18-month price target.

"GAAP operating income was lower than expected, and 4Q24 guidance 2% was weaker than consensus," said Oppenheimer analysts Edward Yang and Kevin Lee, in a note. "Details on AI revenue inflection were sparse, with management reiterating sales up 'triple' from last year, but it was sized at 'tens of millions' back in June, so likely remains below 3% of revenue."

Cadence competitor Synopsys (SNPS) inched up 2.5% early Tuesday.