Cadence Design Systems Stock at Support Zone – Bargain or Trap?

November 25th, 2025 by Trefis Team
CDNS: Cadence Design Systems logo
CDNS
Cadence Design Systems

Cadence Design Systems (CDNS) stock should be on your watchlist. Here is why – it is currently trading in the support zone ($289.25 – $319.69), levels from which it has bounced meaningfully before. In the last 10 years, Cadence Design Systems stock received buying interest at this level 3 times and subsequently went on to generate 13.8% in average peak returns.

  Peak Return Days to Peak Return
4/28/2025 13.1% 29
5/30/2025 8.3% 33
7/2/2025 20.1% 82

Yet, a support zone alone isn’t enough; rebounds are more likely when fundamentals, sentiment, and market conditions line up. How does that look for CDNS?

Rebound Probable on Strong AI-Driven EDA Demand

Cadence’s Q3 2025 earnings beat forecasts, with 10.1% YoY revenue growth and raised FY25 outlook supported by a record $7B backlog. The Electronic Design Automation (EDA) sector, where Cadence is a leader, benefits from strong AI, 5G, and IoT demand. Analysts widely rate CDNS a “Moderate Buy” with average price targets suggesting over 20% upside from current levels, affirming its strategic market position despite a high valuation and insider selling.

Relevant Articles
  1. What’s Behind The 86% Surge in Wheaton Stock?
  2. Why Has Barrick Mining Stock Surged 154%?
  3. What Could Send Pfizer Stock Soaring
  4. What Can Trigger Intel Stock’s Slide?
  5. Cash Machine Trading Cheap – Iridium Communications Stock Set to Run?
  6. 3M Stock vs. Honeywell Stock: Which Is A Better Investment?

How Do CDNS Financials Look Right Now?

  • Revenue Growth: 19.7% LTM and 15.0% last 3-year average.
  • Cash Generation: Nearly 28.4% free cash flow margin and 31.5% operating margin LTM.
  • Recent Revenue Shocks: The minimum annual revenue growth in the last 3 years for CDNS was 9.5%.
  • Valuation: CDNS stock trades at a PE multiple of 77.8

  CDNS S&P Median
Sector Information Technology –
Industry Application Software –
PE Ratio 77.8 23.1
   
LTM* Revenue Growth 19.7% 6.1%
3Y Average Annual Revenue Growth 15.0% 5.4%
Min Annual Revenue Growth Last 3Y 9.5% 0.2%
   
LTM* Operating Margin 31.5% 18.8%
3Y Average Operating Margin 29.8% 18.2%
LTM* Free Cash Flow Margin 28.4% 13.5%

*LTM: Last Twelve Months | For more details on CDNS fundamentals, read Buy or Sell CDNS Stock.

And What If The Support Breaks?

CDNS isn’t immune to big drops, even with strong fundamentals. It fell over 89% in the Global Financial Crisis and about 72% during the Dot-Com crash. The inflation shock and Covid pandemic both triggered dips close to 30%. Even the 2018 correction saw a 22% pullback. Solid companies can still get hit hard when market storms hit.

Still not sure about CDNS stock? Consider the portfolio approach.

A Multi Asset Portfolio Beats Picking Stocks Alone

Individual stocks can soar or tank but multi asset exposure steadies the ride. A spread out portfolio captures upside while limiting the damage from any one market.

The asset allocation framework of Trefis’ Boston-based, wealth management partner yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Our partner’ strategy now includes Trefis High Quality Portfolio, which has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices