Analyst Assessments
Oppenheimer analyst Ittai Kidron restated an Outperform rating on Cisco Systems, Inc CSCO with a price target of $54.
Cisco reported a mixed second quarter, surpassing estimates but projecting below street on third-quarter revenue.
Kidron expressed concerns about a slower pace of inventory digestion and management’s expectation of continued pressure through the end of fiscal 2024.
Despite these challenges, Kidron remained positive on Cisco’s long-term outlook, citing an ample AI opportunity and new cross-sell opportunities in Security and Observability from the Splunk acquisition.
Kidron projected third-quarter revenue and EPS of $12.2 billion (prior $12.9 billion) and $0.85 (prior $0.90).
Market Perform Analysis
JMP analyst Erik Suppiger maintained a Market Perform rating on Cisco.
Suppiger expressed concerns about Cisco’s challenges in gaining share in key growth infrastructure markets but noted some recent momentum in select markets, such as AI networking.
Suppiger projected third-quarter revenue and EPS of $12.2 billion and $0.86.
Assessment of Modest Beats
William Blair analyst Sebastien Naji had a Market Perform rating on the stock.
Naji highlighted modest beats in the second quarter but lowered guidance for fiscal 2024, citing a challenging networking demand environment as a headwind to growth.
Naji projected third-quarter revenue and EPS of $12.1 billion and $0.85.
Challenges and Forecast
Needham analyst Alex Henderson reiterated a Hold rating.
Henderson expressed concern about forecasting the fiscal 2025 outlook given the challenges in Cisco’s networking business and the degree to which the second half of fiscal 2024 guidance understates longer-term normalized demand.
Henderson projected third-quarter revenue and EPS of $12.2 billion and $0.85.
Market Position and Valuation
KeyBanc analyst Thomas Blakey maintained a Sector Weight rating.
Blakey commented on Cisco’s shares trading at a slight discount to the 3-year average P/E and lower visibility, warranting the relative valuation.
Blakey projected third-quarter revenue and EPS of $12.2 billion (prior $12.9 billion) and $0.86 (prior $0.88).
Neutral Rating and Projections
Goldman Sachs analyst Michael Ng had a Neutral rating with a price target of $50. Ng projected third-quarter revenue and EPS of $12.3 billion and $0.86.
JP Morgan analyst Samik Chatterjee projected third-quarter revenue and EPS of $12.5 billion and $0.87.
Price Action and Outlook
Price Action: CSCO shares closed down 2.43% at $49.06 on Thursday.
Photo via Shutterstock