Investment bank Berenberg upgraded Autodesk to Buy from Hold on Friday, raising its price target to $365 from $325 while citing "underappreciated margin expansion opportunities" at the design software company. The move caps a series of rating adjustments by the German firm across the electronic design automation sector over the past eight months.
The upgrade reflects Berenberg's belief that Autodesk can deliver 800 basis points of underlying margin expansion over the next three years, projecting earnings growth at a 16% compound annual rate even under modest revenue assumptions. The firm sees "attractive 20% upside potential" in the stock, which has a market capitalization of $65.2 billion.
Berenberg's outlook on the sector contrasts sharply with challenges facing Synopsys, where the firm cut its price target to $630 from $655 in March while maintaining a Buy rating1. The electronic design automation leader suspended financial guidance for its third quarter and full fiscal year 2025 in May after receiving a letter from the U.S. Commerce Department's Bureau of Industry and Security regarding new export restrictions related to China2.
"Synopsys is currently assessing the potential impact of the BIS Letter on its business, operating results and financial condition," the company stated2. Despite the regulatory uncertainty, Synopsys reported strong second-quarter results with revenue of $1.604 billion, exceeding guidance3.
Berenberg had initially launched coverage of Synopsys in October 2024 with a Buy rating and $660 price target, highlighting the company's position as the largest provider of semiconductor design solutions4. The firm noted Synopsys benefits from "incremental margins that rank among the highest in the industry"4.
Meanwhile, Cadence Design Systems, which Berenberg initiated with a Buy rating and $320 price target in October 2024, has delivered strong performance amid the artificial intelligence chip boom1. The company reported first-quarter 2025 revenue of $1.242 billion, a 23% year-over-year increase, and raised its full-year revenue guidance to $5.15 billion to $5.23 billion2.
Cadence's semiconductor IP revenue surged 40% in the quarter, driven by demand for AI-driven chips and chiplet architectures, while its System Design and Analysis revenue jumped over 50%2. The company's backlog reached $6.4 billion at quarter-end2.
Berenberg had praised Cadence's "superior product offerings and efficient operational model" when initiating coverage, noting the company's resilience against semiconductor sector cyclicality due to its research and development-focused business model1.
