Posted Wed Mar 25, 03:58 pm ET Posted By: Ian Gilson, CFA, Ph.D
We expect that a turnaround is going to take time at Cadence Design Systems, Inc. (CDNS) due to mounting financial problems leading to lackluster growth. The company reported weak 2008 results and provided guidance for a poor 2009.
We have lost confidence in the company's ability to survive in the market and show healthy fundamentals. Cadence has been losing share to Synopsys (SNPS) and is struggling through a downturn in the semiconductor cycle.
Cadence also withdrew its bid for Mentor Graphics (MENT) in 2008, further dimming its growth prospects. Cadence recently came out with enhanced version of its products, but it will take time for these to generate additional revenue.
We maintain a Sell rating on the shares and maintain our 6-month price target of $2.50.