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Barclays analyst Tim Long said order growth at Cisco is likely to slow.
Joseph Lago via Getty Images / AFP
Optimistic about Wall Street
Cisco
The system’s quarterly results came after trading closed on Wednesday, but concerns remain about how the networking giant’s outlook could be affected by difficult macroeconomic conditions.
For the quarter ended April, Cisco (Ticker: CSCO) projected revenue growth of 3% to 5%, with GAAP gaining 85 to 87 cents a share. Street Consensus is for revenue of $ 13.4 billion, up 4.4%, with a profit of 86 cents, in the middle of the target range.
For the July quarter, Roads agreed that revenue would be $ 13.9 billion, which would be about 6%, with a 92 cents gain in shares. Cisco estimates that July 2022 fiscal revenue will grow between 5.5% and 6.5%, with a non-GAAP gain of $ 3.41 to $ 3.56 per share.
Barclays analyst Tim Long said in a research note previewing the results that Wall Street is very negative about the stock. He sees Cisco as a market shareholder in the networking gear of cloud-computing providers.
But Long and other analysts note that orders are likely to test the company’s progress, which has risen from 31% to 33% in each of the last three quarters. Long’s financial model indicates a growth order of 20% for the quarter ৷
“We find the assessment interesting, and positive for the recovery of the networking industry, profit sharing in the cloud vertical, and growth of software content,” Long wrote. He kept an overweight rating on the stock, targeting a price target of $ 68.
The stock closed at $ 50.60 on Tuesday, up 3.3%, leaving the price down 20% so far this year.
JP Morgan
Analyst Samik Chatterjee is equally optimistic about the quarterly and long-term outlook. He sees two basic questions. One is whether the company can continue to report outsourced gains at the customer’s behest; The other is whether Cisco’s gross margin expectations should be reduced in the face of high costs.
He said he saw no signs of a slowdown in macro-related orders, adding that Cisco would be able to launch revenue at the upper end of the forecast range for the year. And Chatterjee thinks the current stock price already reflects some expected pressure on gross margins.
His view is that Cisco offers investors a “favorable risk-reward in printing income.” Cisco shares have an overweight rating of Chatterjee and a target of 67.
Everco’s ISI analyst Amit Dariani reiterated an outperform rating on Cisco shares this week, but cut its target price from $ 67 to $ 62. His view is that although Cisco is in a better position to deliver a better April quarter than Wall Street expected, the July quarter looks even more challenging.
“The key potential reverse driver will set the price because our channel check indicates that Cisco has been more aggressive in raising list prices than their competitors,” Dariani wrote. “The question is: do these price increases reflect what customers are actually paying for, or is Cisco offering discounts on list prices for the increase?”
Eric J. at [email protected] Write to Savitz
