Cadence Teams Up With Northrop Grumman To Develop SoC Projects

Cadence Design Systems, Inc. (NASDAQ:CDNS) recently collaborated with Northrop Grumman (NYSE:NOC) to develop advanced-node system-on-chip (SoC) projects, in order to offer high-quality and high-performance SoCs. However, the financial details of the deal have been kept under wraps.

Through this collaboration, Cadence is well poised to deliver efficient, cost saving and high-quality functionality related to digital and signoff, custom and analog, and IP solutions in aerospace and defense industry.

Northrop Grumman is a worldwide security company providing innovative systems, products and solutions in autonomous industry. Cadence is well-known for its expertise in the aerospace and defense industry and has been associated with Northrop Grumman for more than 20 years.

Notably, the company’s investments in this high-growth market are helping it diversify customer base and extend reach in the aerospace and defense industry.

Coming to price performance, shares of Cadence have returned 70.4% in the past year, substantially outperforming the industry’s rally of 24.4%.

What’s Favoring Adoption of Cadence IP Solutions?

Cadence is leaving no stone unturned to assist its customers in reducing time to market by accelerating their SoC design processes.

The company is benefiting from robust adoption of the company’s PCIe (peripheral component interconnect express) and DDR products in the IP segment.

Further, Cadence is focusing on providing end-to-end solutions, which rapidly reduces the time required to introduce a semiconductor product in the market. In this regard, the company's frequent product launches and enhancements bode well.

Traction witnessed by Xcelium Parallel Simulator and Palladium Z1 drove revenues in System Design and Verification solutions. Traction witnessed by Palladium Z1 on the back of strong demand for growing hardware capacity was noteworthy.

Management is also elated on the order strength in Palladium Cloud solution which offers cloud-based emulation capacity as per the customers’ demand.

The company remains optimistic about its ongoing collaboration with Taiwan Semiconductor Manufacturing Company. Notably, Cadence garnered four partner of the year awards at TSM’s Open Innovation Platform, comprising 5 nm design architecture collaboration.

Furthermore, Cadence collaborated with Microsoft’s Azure, Amazon’s Amazon (NASDAQ:AMZN) Web Services (“AWS”) and Google (NASDAQ:GOOGL) Cloud platform to enable smooth design development of electronic systems and semiconductors. Management is elated with the sturdy pipeline of the company’s innovative cloud-ready solutions.

With Cadence Cloud, the company aims to offer a comprehensive cloud portfolio enabling the development of semiconductors and other electronic systems.

Moreover, increasing investments on Internet-of-things (IoT), augmented and virtual reality (AR/VR) and autonomous vehicle sub-systems present significant growth opportunity.

Furthermore, growing clout of Cadence’s IP solutions particularly in the edge-computing and high performance computing (HPC) end-market holds promise. In fact, per Grand View Research estimates, HPC market is projected to to reach $59.65 billion by 2025 at a CAGR of 7.2%.

We believe that incremental adoption of the offerings will favor financial performance of IP segment going ahead.

Zacks Rank and Other Stocks to Consider

Currently, Cadence sports a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks in the broader technology sector are Guidewire Software, Inc. (NYSE:GWRE) , Synopsys, Inc. (NASDAQ:SNPS) and Symantec Corporation (NASDAQ:SYMC) , each flaunting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Guidewire Software, Synopsys and Symantec have long-term earnings growth rates of 8%, 10% and 7.9%, respectively.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.

This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.

See their latest picks free >>