What Analysts Are Saying About Cisco After Earnings

Cisco Systems Inc. (NASDAQ: CSCO) reported its most recent quarterly results this week past, and many were wondering if the company could make a comeback after being relatively stagnant for so long. This report ultimately proved the faithful investors right, and most analysts rewarded it even after the report.

24/7 Wall St. has included some brief highlights from the earnings report, as well as what analysts are saying about Cisco after the fact.

Cisco posted $0.61 in earnings per share (EPS) and $12.1 billion in revenue, which compared with consensus estimates from Thomson Reuters of $0.60 in EPS on revenue of $12.11 billion. The fiscal first-quarter of last year reportedly had EPS of $0.61 and $12.35 billion in revenue.

During the quarter, total revenues dipped by 2%, consisting of a drop in product revenue by 3% and service revenue falling 1%. Also, 32% of total revenue was from recurring offers, up over three percentage points from this time last year.

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At the same time, deferred revenue came to $18.6 billion, up 10% in total, with deferred product revenue up 16%, driven largely by subscription-based and software offers, and deferred service revenue was up 5%. The portion of product deferred revenue related to recurring software and subscription offers increased 37%.

Looking ahead to the fiscal second quarter, management is expecting to see EPS between $0.58 and $0.60 and revenue growth in the range of 1% to 3%. The consensus estimates call for $0.58 in EPS and $11.7 billion in revenue for the quarter.

Merrill Lynch maintained its Neutral rating, but the price objective was raised to $37 from $35. The firm’s report noted:

Cisco reported solid first quarter results and issued better than expected second revenue and earnings guidance; second quarter revenue is expected to be up roughly 2%. New campus switching traction and Wifi helped offset weak routing; Applications growth helped by collaboration, AppDynamics. Still, guidance was only 1% better versus estimates and year over year growth is on easy comps; weak SP and product trends persist; reiterate Neutral.

Jefferies reiterated its Buy rating on Cisco and raised its target to $40 from $37. Jefferies said:

This was a breakout quarter for Cisco. The print, guidance, and the narrative around the business were significantly better than many investors expected. Impressively, they’re now guiding for top-line growth in January. We continue to like the risk/reward in the name.

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Oppenheimer reiterated its Outperform rating and raised its target price to $40 from $36. Oppenheimer’s view is that Cisco’s vision is finally resonating with its customers. The firm’s report noted:

The quarter offered a number of positive data points (campus switching, security, AppD, etc.) that should leave investors confident that Cisco is on the right track. While near-term upside is possible, the business model shift should drive greater long-term economic upside to Cisco. Meanwhile, share repurchases/dividend yield (3.4%) should keep investors engaged while tax reform remains a wild card.

Here’s what some other analysts had to say after the report was released:

• Argus has a Buy rating and raised its price target to $44 from $41.
• Cowen reiterated a Buy rating.
• MKM has a Neutral rating with a $38 price target.
• Baird reiterated a Buy rating.
• BMO Capital Markets has a Market Perform rating and raised its target to $36 from $32.
• Deutsche Bank has a Buy rating and raised its price target to $45 from $40.
• Nomura has a Neutral rating and raised its price target to $33 from $29.
• Citigroup reiterated a Buy rating and raised its price target from $36 to $40.
• Barclays has an Overweight rating and raised its target to $37 from $34.

Shares of Cisco were last seen trading at $35.90, with a consensus analyst price target of $38.70 and a 52-week range of $29.12 to $36.67.

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