Cisco Systems, Inc. (CSCO) Continues to Execute Well, Says Oppenheimer; Raises Target to $50


Cisco Systems, Inc. (NASDAQ:CSCO) reported solids results, achieving its first quarter of revenue growth since 2016 and beating on margins and EPS. Specifically, revenue of $11.9 billion topped consensus estimate of $11.8 billion. Importantly, both gross margin and operating margin beat by 140 bps, driving EPS of $0.63, $0.04 above consensus estimate of $0.59.

In reaction, Oppenheimer analyst Ittai Kidron raised his price target for CSCO to $50 (from $46), while maintaining an Outperform rating on the stock.

Kidron commented, “Cisco reported solid Jan.-quarter results and provided positive guidance. While pockets of weakness remain (mainly service provider), the results and order metrics suggest that the overall outlook for Cisco continues to improve. Overall, execution remains high, and it’s clear that Cisco is on the right track with its software-focused strategy beginning to deliver results. Several positive data points (Cat 9K/Cisco ONE traction, Commercial order growth, AppD uptake, etc.) should give investors confidence that the improved business momentum can be sustained. We believe that hybrid/subscription solutions are creating stickier customer relationships and should drive greater long-term economic upside to Cisco. Share repurchases ($31B/~15% of market cap) and dividend yield (3.1%) make shares incrementally more attractive.”

The analyst concluded, “Cisco continues to execute well on its business model transformation (recurring/subscription), with results and commentary suggesting that it is starting to deliver. With an improving macro backdrop and strong order trends, we see room for continued upside. Significant share repurchases and an attractive dividend yield add to the potential. Adjusting estimates for results/guidance and US tax reform.”

Most analysts on Wall Streets are out rooting for this networking titan to be a winning stock pick, as TipRanks analytics showcase CSCO as a Strong Buy. Based on 25 analysts polled in the last 3 months, 20 rate a Buy on Cisco stock while 5 recommend a Hold.