Cadence Design Systems is the IBD Stock Of The Day as the maker of electronic design automation software bounces back from a post-earnings report swoon. CDNS stock retook a key support level on Thursday.
In afternoon trading on the stock market today, CDNS stock jumped 6.2% to 216.84. Further, Cadence surged above its 50-day moving average line in heavy volume.
Aggressive investors could have used the move above the 50-day line as an entry. Meanwhile, Cadence stock has been building a flat base with a buy point of 217.77, according to IBD MarketSmith charts.
CDNS stock fell below its 50-day line on April 25, the first trading session after the company's first-quarter report. Cadence beat Wall Street's targets for the March quarter but gave a weak outlook for the current quarter.
CDNS Stock Sell-Off Was 'Unwarranted'
Many analysts said the stock's post-earnings drop was an overreaction, noting that the company's full-year outlook topped views.
In a note to clients, Needham analyst Charles Shi called the sell-off "unwarranted."
"We think the business is strong despite the weak macro environment, and would be buyers on the weakness," Shi said. He rates CDNS stock as buy with a price target of 235.
Baird analyst Joe Vruwink reiterated his outperform rating on Cadence and upped his price target to 223 from 215 after the report.
The stock "pullback is a healthy development," Vruwink said in his note to clients. The action "positions shareholders for what we expect to be resuming stock appreciation during the second half of 2023."
Cadence Design Is On Three IBD Stock Lists
Rosenblatt Securities analyst Blair Abernethy kept his buy rating and price target of 215 on CDNS stock after the earnings report.
"Cadence's expanding lineup of AI-driven solutions continue to gain traction, driving material customer design productivity improvements," Abernethy said in a note. These advanced products "should enable it to capture a greater share of customers' overall R&D budgets."
Cadence Design is tied for first place among 12 stocks in IBD's Computer Software-Design industry group, according to IBD Stock Checkup. CDNS stock has an excellent IBD Composite Rating of 98 out of 99.
Also, CDNS stock is on the IBD Long-Term Leaders, Big Cap 20 and Tech Leaders stock lists.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
