Cadence Design Systems (NASDAQ:CDNS) Shares Gap Down - What's Next?

Key Points

• Cadence Design Systems gapped down sharply on Friday, opening at $334.56 after closing at $364.65 and last trading around $327.25, a drop of about 10.1%.
• Despite the selloff, analysts remain broadly positive: the stock carries a Moderate Buy consensus with an average price target of $393.65, and several firms recently reiterated or raised bullish targets as high as $450.
• The company’s latest earnings beat expectations, with Q1 revenue and EPS topping estimates, while management also issued FY 2026 guidance of $7.85 to $7.95 EPS; however, insider selling has been notable in recent months.

Cadence Design Systems, Inc. (NASDAQ:CDNS - Get Free Report) gapped down before the market opened on Friday . The stock had previously closed at $364.65, but opened at $334.56. Cadence Design Systems shares last traded at $327.2490, with a volume of 547,627 shares.

Analyst Upgrades and Downgrades

CDNS has been the subject of a number of analyst reports. Needham & Company LLC reissued a "buy" rating and issued a $400.00 price objective on shares of Cadence Design Systems in a report on Tuesday, April 28th. Stifel Nicolaus lifted their target price on shares of Cadence Design Systems from $395.00 to $432.00 and gave the stock a "buy" rating in a research note on Tuesday, June 9th. Weiss Ratings reiterated a "hold (c)" rating on shares of Cadence Design Systems in a report on Thursday, July 2nd. Benchmark started coverage on shares of Cadence Design Systems in a research note on Wednesday. They issued a "buy" rating and a $450.00 price target for the company. Finally, Berenberg Bank set a $440.00 price target on shares of Cadence Design Systems in a report on Wednesday, May 27th. One investment analyst has rated the stock with a Strong Buy rating, thirteen have assigned a Buy rating and three have issued a Hold rating to the stock. According to MarketBeat.com, the company currently has a consensus rating of "Moderate Buy" and an average target price of $393.65.

Cadence Design Systems Trading Down 10.1%

The firm has a market cap of $90.39 billion, a price-to-earnings ratio of 76.44, a price-to-earnings-growth ratio of 4.40 and a beta of 1.15. The company has a debt-to-equity ratio of 0.38, a quick ratio of 1.32 and a current ratio of 1.47. The company has a 50 day moving average price of $376.74 and a 200 day moving average price of $328.56.

Cadence Design Systems (NASDAQ:CDNS - Get Free Report) last issued its quarterly earnings data on Monday, April 27th. The software maker reported $1.96 earnings per share (EPS) for the quarter, topping analysts' consensus estimates of $1.91 by $0.05. Cadence Design Systems had a return on equity of 28.44% and a net margin of 21.18%.The firm had revenue of $1.47 billion during the quarter, compared to the consensus estimate of $1.46 billion. During the same period last year, the company earned $1.57 EPS. The company's quarterly revenue was up 18.6% on a year-over-year basis. Cadence Design Systems has set its FY 2026 guidance at 7.850-7.950 EPS and its Q2 2026 guidance at 2.020-2.080 EPS. On average, research analysts expect that Cadence Design Systems, Inc. will post 6.23 earnings per share for the current year.

Insiders Place Their Bets

In other news, Director Ita M. Brennan sold 180 shares of the business's stock in a transaction that occurred on Wednesday, June 10th. The shares were sold at an average price of $387.45, for a total value of $69,741.00. Following the sale, the director directly owned 8,004 shares of the company's stock, valued at approximately $3,101,149.80. The trade was a 2.20% decrease in their position. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is available at this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, VP Paul Cunningham sold 2,000 shares of the company's stock in a transaction that occurred on Monday, June 15th. The stock was sold at an average price of $391.00, for a total transaction of $782,000.00. Following the completion of the transaction, the vice president owned 126,586 shares in the company, valued at approximately $49,495,126. This represents a 1.56% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. In the last ninety days, insiders sold 157,057 shares of company stock worth $60,272,277. Insiders own 0.49% of the company's stock.

Institutional Inflows and Outflows

Several hedge funds and other institutional investors have recently modified their holdings of CDNS. Pinnacle Wealth Management Advisory Group LLC lifted its stake in Cadence Design Systems by 3.1% during the 1st quarter. Pinnacle Wealth Management Advisory Group LLC now owns 1,033 shares of the software maker's stock worth $287,000 after acquiring an additional 31 shares in the last quarter. Westfuller Advisors LLC boosted its holdings in Cadence Design Systems by 8.2% during the 1st quarter. Westfuller Advisors LLC now owns 408 shares of the software maker's stock valued at $113,000 after acquiring an additional 31 shares during the period. Spirepoint Private Client LLC grew its position in Cadence Design Systems by 4.6% in the 4th quarter. Spirepoint Private Client LLC now owns 722 shares of the software maker's stock valued at $226,000 after acquiring an additional 32 shares in the last quarter. Cornerstone Planning Group LLC grew its position in Cadence Design Systems by 32.0% in the 1st quarter. Cornerstone Planning Group LLC now owns 132 shares of the software maker's stock valued at $37,000 after acquiring an additional 32 shares in the last quarter. Finally, KCM Investment Advisors LLC increased its stake in Cadence Design Systems by 0.4% during the first quarter. KCM Investment Advisors LLC now owns 8,013 shares of the software maker's stock worth $2,227,000 after purchasing an additional 32 shares during the period. 84.85% of the stock is currently owned by hedge funds and other institutional investors.

About Cadence Design Systems

Cadence Design Systems, Inc NASDAQ: CDNS is a global provider of electronic design automation (EDA) software, hardware and intellectual property used to design and verify advanced semiconductor chips, systems-on-chip (SoCs), printed circuit boards (PCBs) and packaging. Headquartered in San Jose, California and founded in 1988, Cadence serves semiconductor companies, original equipment manufacturers and system designers across the globe, helping customers accelerate design cycles and manage the complexity of modern integrated systems.

The company's offerings span software tools for digital, custom/analog and mixed-signal design, verification and signoff, as well as solutions for system-level modeling, thermal and signal integrity analysis, and PCB and package design.

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