Why The Market Is Mispricing Cadence Design Systems
Trading the Spread • 13 Comments
Trading the Spread • 13 Comments
Fri, May 20, 1:32 PM
- After plummeting in November following its FQ3 report (weak results/guidance) and declining in March after its FQ4 report (results beat, but guidance was mixed), Mentor Graphics (MENT +7.3%) is faring much better today after beating FQ1 estimates and issuing solid guidance.
- The chip design hardware/software firm expects FQ2 revenue of $245M and EPS of $0.09 vs. a consensus of $236.4M and $0.09. It's affirming FY17 (ends Jan. '17) guidance for revenue of $1..215B, EPS of $1.68, and op. cash flow of $200M.
- Revenue was still down 16% Y/Y in FQ1, and Mentor notes "weakness in semiconductor-related activity" (caused in part by R&D spending cuts that have followed industry M&A) remained. On the flip side, bookings for automotive customers (have benefited from growing chip/electronics content within cars) hit a new record.
- System/software revenue fell 32% Y/Y to $106.7M, while service/support revenue (fueled by part system/software sales) rose 4% to $120.9M. Non-GAAP operating expenses rose by a modest $500K to $182.5M. Mentor ended FQ1 with $216M in cash and $273M in debt.
- EDA hardware/software peers Cadence (CDNS +2.7%) and Synopsys (SNPS +2.4%) are also outperforming - Synopsys posted an FQ2 beat on Wednesday afternoon. The Nasdaq is up 1.2%.
- Mentor's FQ1 results, earnings release
Mon, Apr. 25, 5:39 PM
Mon, Apr. 25, 4:24 PM
- Cadence Design Systems (NASDAQ:CDNS) is off 1.6% after hours following a Q1 report where it beat expectations but guided to the low side on profits.
- It guided to Q2 revenues of $445M-$455M (in line), and GAAP EPS of $0.17-$0.19 (vs. consensus of $0.19) and non-GAAP EPS of $0.27-$0.29 (vs. $0.29 consensus).
- For the full year, it sees revenues of $1.79B-$1.84B (in line); GAAP EPS of $0.71-$0.81 (vs. consensus expectation for $0.81) and non-GAAP EPS of $1.15-$1.25 (vs. $1.21).
- Revenues grew nearly 9% with broad gains, and it was Cadence's best quarter ever for hardware revenue.
- By segment: Product and maintenance, $411.7M (up 7.3%); Services, $36.1M (up 30.3%).
- Conference call to come at 5 p.m. ET.
- Press Release
- Now read Cadence Design Systems: A Long-Term Play On IoT »
Thu, Feb. 4, 9:19 AM
- Gainers: VHC +89%. GLUU +21%. OCLS +18%. WFT +12%. ATNY +11%. SEDG +11%. PETX +10%. SVA +9%. ING +9%. TTWO +8%. SBH +8%. GRUB +7%. VALE +7%. HMY +7%. CDNS +6%. CDE +6%. SBGL +6%. GSH +5%. AUY +5%. VIAB +5%. RIO 5%.
- Losers: PPP -16%. KSS -15%. GPRO -15%. IMPV -13%. CS -13%. PACB -13%. RL -9%. AZN -7%.
Nov. 19, 2015, 5:41 PM
- In addition to missing FQ3 estimates, Mentor Graphics (NASDAQ:MENT) has guided for FQ4 revenue of $336M and EPS of $0.47, well below a consensus of $439.3M and $0.97.
- Notably, the EDA hardware/software vendor states the chip industry's massive M&A wave is "having an adverse impact on our ability to close business," as are delays in buying decisions for Mentor's Veloce emulation systems.
- System/software revenue fell 5% Y/Y in FQ3 to $168.7M, while service/support revenue (more stable) rose 6% to $121.8M. Non-GAAP operating expenses rose 3% Y/Y to $201.4M.
- Mentor has plunged to $21.49 after hours. EDA peers are also lower: Cadence (NASDAQ:CDNS) is down 7.7% to $21.35, and Synopsys (NASDAQ:SNPS) is down 2.6% to $51.17.
- Mentor's FQ3 miss, PR
Feb. 5, 2015, 3:01 PM
- Though Cadence's (NASDAQ:CDNS) Q4 results were in-line, the EDA software giant is guiding for Q1 EPS of $0.20-$0.22 and 2015 EPS of $0.94-$1.06, below consensus estimates of $0.23 and $1.07. Revenue guidance is healthier: Q1 revenue of $405M-$415M and 2015 revenue of $1.68B-$1.72B vs. consensus estimates of $407.9M and $1.7B.
- On its CC (transcript), Cadence guided for 2015 bookings to rise 5%-9% to $1.87B-$1.93B (spells a positive book-to-bill). It suggested investments in R&D and customer support needed to win/maintain new deals with major customers was partly responsible for the light profit outlook. The guidance comes even though Cadence's tax rate is expected to fall 3% in 2015 to 23%.
- Q4 results, PR
Oct. 20, 2014, 5:34 PM
- Cadence (NASDAQ:CDNS) expects Q4 revenue of $417M-$427M and EPS of $0.26-$0.28, below a consensus of $427.4M and $0.29.
- Q3 product/maintenance revenue +10% Y/Y to $374.1M; services revenue +9% to $400.5M.
- Excluding restructuring charges, opex rose 5% Y/Y to $346.4M. R&D spend +8% to $148.7M, and equal to 37% of revenue.
- Q3 results, PR
Mar. 17, 2014, 9:43 AM
- VMware (VMW +2.2%) has been started at Buy by Monness Crespi.
- SAP (SAP +2.2%) has been upgraded to Buy by Citi.
- VeriSign (VRSN -8.8%) has been cut to Market Perform by Cowen. The downgrade comes as the NTIA announces it will relinquish control of the Internet's domain name management system to an international body. VeriSign insists the move won't affect its operation of the .com and .net registries.
- CommVault (CVLT +3.3%) has been upgraded to Buy by Mizuho.
- RingCentral (RNG +4.5%) has been started at Outperform by William Blair.
- NetScout (NTCT +0.1%) has been cut to Neutral by D.A. Davidson.
- RPX (RPXC +3%) has been started at Outperform by Cowen.
- Cadence (CDNS +1.4%) has been started at Overweight by Piper.
Nov. 26, 2013, 9:36 AM
- FireEye (FEYE +4.3%) has been upgraded to Overweight by Barclays.
- ASML (ASML +0.6%) has been upgraded to Buy by SocGen.
- Cadence (CDNS +1.7%) has been upgraded to Outperform by Pac Crest.
- Cornerstone OnDemand (CSOD +3.7%) has been upgraded to Overweight by Stephens.
- 58.com (WUBA +2.7%) has been started at Buy by Citi, and at Outperform by Pac Crest.
- Qunar (QUNR +0.3%) has been started at Outperform by Pac Crest, and at Hold by Sifel.
- Extreme Networks (EXTR +5.1%) has been started at Buy by Needham.
Oct. 24, 2013, 9:56 AM
- Angie's List (ANGI -3.9%) has been cut to Neutral by B. Riley after missing Q3 estimates and issuing below-consensus Q4 revenue guidance. However, shares have pared the majority of yesterday's AH losses.
- F5 (FFIV +1.6%) has been cut to Neutral by BofA/Merrill after beating FQ4 estimates and issuing mixed FQ1 guidance. Shares have given back most of yesterday's AH gains.
- Fusion-io (FIO -23.6%) has been cut to Equal Weight by Morgan Stanley after providing FQ1 guidance that was far below consensus, and disclosing its CFO and sales chief are leaving.
- Akamai (AKAM -9.3%) has been cut to Neutral by Macquarie after providing disappointing Q4 guidance to go with a Q3 beat and buyback announcement.
- Citrix (CTXS +4.2%) has been cut to Neutral by Susquehanna after providing soft (but better-than-feared) Q4 guidance to go with Q3 numbers that were slightly above the guidance ranges given in a recent warning.
- Rogers (RCI -2.3%) has been cut to Neutral by Macquarie after posting Q3 results.
- Cadence (CDNS -6.2%) has been cut to Hold by Needham after slightly missing Q3 revenue estimates and providing soft Q4 revenue guidance.
- Vipshop (VIPS +0.9%) has been started at Outperform by CLSA.
Sep. 12, 2013, 3:59 PM
- Analyst Thomas Diffely has upgraded Cadence (CDNS +2.9%) to to Buy, arguing the chip design (EDA) software vendor is seeing "healthy design activity" in core markets, and has an attractive valuation (7.6x 2014E EV/EBITDA, below a peer group average of 8.5x).
- Diffely has set a PT of $16, or 15x 2014E EPS after factoring net cash.
- Cadence has traded in a relatively narrow range over the last 12 months.
Jul. 30, 2013, 9:43 AM
- Bankrate (RATE +13.6%) has been upgraded to Buy by BofA in response to its Q2 report.
- SanDisk (SNDK -2.5%) has been cut to Neutral by Goldman.
- OpenTable (OPEN -1.3%) has been cut to Neutral by Macquarie.
- Sohu (SOHU -0.7%) has been cut to Equal Weight by Morgan Stanley following yesterday's Q2 report (I, II).
- EDA software firms Mentor Graphics (MENT -0.1%) and Synopsys (SNPS +0.8%) have been started at Outperform by Pac Crest. Rival Cadence (CDNS -0.2%) has been started at Sector Perform.
Jul. 24, 2013, 4:40 PMCadence Design (CDNS): Q2 EPS of $0.21 beats by $0.01. Revenue of $362M beats by $2.4M. Shares +1.2% AH. (PR) | Jul. 24, 2013, 4:40 PM
Apr. 25, 2013, 5:55 PM
Apr. 24, 2013, 4:24 PMCadence Design (CDNS): Q1 EPS of $0.21 beats by $0.01. Revenue of $354M beats by $6.66M. Shares +2.1% AH. (PR) | Apr. 24, 2013, 4:24 PM
Feb. 2, 2012, 5:18 PM
Cadence Design Systems, Inc. engages in the design and development of integrated circuits and electronic devices. Its products include Electronic Design Automation, software, emulation hardware, and two categories of intellectual property (IP), commonly referred to as verification IP, and design... More
Industry: Technical & System Software
Country: United States
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