Cadence Design Systems (CDNS) delivered one of its strongest Q1 full-year guidance raises on broad-based electronic design automation, system design and analysis and hardware demand, BofA Securities said Monday in a note, reiterating the stock as its top EDA pick.
The company raised its full-year 2026 revenue outlook by about $65 million, in addition to an expected contribution of roughly $160 million from Hexagon's Design and Engineering business. Pro-forma EPS increased by $0.08, partly offset by acquisition-related dilution. BofA added the guidance could prove conservative as it implies only about 2.5% H2 growth.
The brokerage said Cadence remains poised to catch up with the broader semiconductor sector, citing the increasing criticality of electronic design automation, reaccelerating semiconductor R&D spending and upside from improving Intel foundry sentiment and growing EDA budgets.
The investment firm also raised its 2026 and 2027 pro-forma EPS estimates by 1% each, saying Cadence's growth and margin profile could make it a "rule of 60" stock by year-end.
BofA reiterated its buy rating on Cadence and raised the price objective to $400 from $375.
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