Cadence Design Systems (CDNS)

Cadence Design Systems (CDNS - Analyst Report) reported weak results for 1Q 2009. We expect that a turnaround is going to take time due to mounting financial problems leading to a lackluster growth. The company provided guidance for a poor 2Q and 2009.

Although Cadence is offering new products and taking cost-cutting measures, we are not confident in the company's ability to grow and show healthy fundamentals. Cadence has been losing share to Synopsys and is struggling through a downturn in the semiconductor cycle. Cadence also withdrew its bid for Mentor Graphics in 2008, further dimming its growth prospects.

Cadence recently came out with enhanced versions of its products, but it will take time for these to generate additional revenue. We maintain a Sell rating on the shares and reiterate our six-month price target of $2.50.