Semiconductor design software provider Cadence Design Systems (NASDAQ:CDNS) will be reporting earnings tomorrow after the bell. Here's what to look for.

Last quarter Cadence reported revenues of $1.07 billion, up 18.8% year on year, in line with analyst expectations. It was a weaker quarter for the company, with underwhelming revenue guidance for the next quarter.

Is Cadence buy or sell heading into the earnings? Read our full analysis here, it's free.

This quarter analysts are expecting Cadence's revenue to decline 0.3% year on year to $1.02 billion, a deceleration on the 13.3% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $1.13 per share.

Majority of analysts covering the company have reconfirmed their estimates over the last thirty days, suggesting they are expecting the business to stay the course heading into the earnings. The company only missed Wall St's revenue estimates once over the last two years, and has on average exceeded top line expectations by 2.3%.

Looking at Cadence's peers in the vertical software segment, only Adobe has so far reported results, delivering top-line growth of 11.3% year on year, and beating analyst estimates by 0.7%. The stock was down 9.1% on the results.

Stocks, especially growth stocks where cash flows further in the future are more important to the story, had a good end of 2023. The beginning of 2024 saw mixed inflation data, however, leading to more volatile stock performance, and while some of the vertical software stocks have fared somewhat better, they have not been spared, with share price declining 9.3% over the last month. Cadence is down 11.5% during the same time, and is heading into the earnings with with analyst price target of $323.8, compared to share price of $279.7.

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