UPDATE 1-JP Morgan raises Cadence to overweight
Wednesday, October 08, 2008 07:57ET
NEW YORK, Oct 08, 2008 (Thomson Financial via COMTEX) -- (Recasts; adds details)
Oct 8 (Reuters) - J.P. Morgan Securities upgraded Cadence Design Systems Inc to "overweight" from "underweight," saying the software company's scheduled restructuring and its contract renewals in 2009 and 2011 make it an investment choice.
"By no means is this an easy call," analyst Sterling Auty said in a note to clients. "There will be several bumps along the way as management has to reinvigorate a lagging product portfolio, meet new competition in its analog strong hold, restructure its workforce and combat sluggish demand for EDA."
This could put Cadence into three- to four-year transition that would take its margin expansion up to 21 percent in 2012 from zero percent this year, the analyst added.
The electronic design automation (EDA) software sector will get healthier in 2009 and should lag the impact of the semiconductor industry, which is expected to get worse before better in 2009, Auty said.
Auty said the company's shares look attractive on both a free cash flow multiple and a discounted free cash flow basis.
Shares of the company closed at $5.16 Tuesday on Nasdaq.
(Reporting by Antonita Madonna Devotta in Bangalore; Editing by Anil D'Silva) Keywords: CADENCEDESIGN/RESEARCH JPMORGAN Chuck Mikolajczak cm
COPYRIGHT
Copyright Thomson Financial News Limited 2007. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
MMMM
(C) 2008 XFN, Inc. All rights reserved.
"It was the best of times, it was the worst of times; it was the age of wisdom, it was the age of foolishness;
-- Charles Dickens
