Shareholders might have noticed that Cadence Design Systems, Inc. (NASDAQ:CDNS) filed its yearly result this time last week. The early response was not positive, with shares down 8.8% to US$270 in the past week. It was a credible result overall, with revenues of US$4.6b and statutory earnings per share of US$3.85 both in line with analyst estimates, showing that Cadence Design Systems is executing in line with expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Cadence Design Systems after the latest results.

View our latest analysis for Cadence Design Systems

Taking into account the latest results, the current consensus from Cadence Design Systems' 21 analysts is for revenues of US$5.19b in 2025. This would reflect a meaningful 12% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to grow 14% to US$4.40. Before this earnings report, the analysts had been forecasting revenues of US$5.25b and earnings per share (EPS) of US$4.77 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

The consensus price target held steady at US$324, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Cadence Design Systems, with the most bullish analyst valuing it at US$355 and the most bearish at US$225 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Cadence Design Systems shareholders.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The period to the end of 2025 brings more of the same, according to the analysts, with revenue forecast to display 12% growth on an annualised basis. That is in line with its 13% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 12% annually. It's clear that while Cadence Design Systems' revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Cadence Design Systems. Long-term earnings power is much more important than next year's profits. We have forecasts for Cadence Design Systems going out to 2027, and you can see them free on our platform here.

We also provide an overview of the Cadence Design Systems Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.