Analysts Weigh In on Two Earnings Winners: Cisco Systems, Inc. (CSCO), Tesla Motors Inc (TSLA)

It’s a tale of two technology firms today, as shares of network equipment maker Cisco Systems, Inc. (NASDAQ:CSCO) climbed 9%, and shares of electric car giant Tesla Motors Inc (NASDAQ:TSLA) rose 4.73%, following their positive earnings reports. Here’s a quick roundup of today’s brokerage notes on TSLA and CSCO.

Cisco Systems, Inc.

In addition, Deutsche Bank analyst Vijay Bhagavath reiterated a Buy rating on shares of Cisco Systems, with a price target of $33, after the network equipment maker reported results that were better than expected, with both revenue and gross margins topping estimates.

Bhagavath said, “While we are cognizant of setup for incrementally weaker Enterprise IT spend, offset by stable Service Provider, Web 2.0, current levels are attractive entry point into potential for “rerating” the multiple to “mid teens”, given accelerated transition, we note, to a Software and Recurring Revenue model. Reiterate BUY; trim PT from $35 to $33, reflecting peer multiple compression and updated FY16/17 estimates.”

The analyst added, “Fundamental basis for our BUY rating is the positive mix and margin shift we note to Software and Recurring Revenues (+40% of CSCO’s portfolio having meaningful Softwa re content; +6% of CSCO’s revenues coming from the balance sheet). We plan on discussing the Software and Recurring Revenue theme in depth in upcoming research.”

According to, analyst Vijay Bhagavath has a yearly average return of -17.6% and a 18.0% success rate. Bhagavath has a -13.0% average return when recommending CSCO, and is ranked #3437 out of 3569 analysts.

The overwhelmingly majority of analysts say Cisco Systems is a “buy.” The average forecast is for the stock to hit $29 in the coming months, according to data compiled by TipRanks.

Tesla Motors Inc

Tesla reported a surprise fourth-quarter loss but shares rose nearly 5% as the company reiterated 2016 positive guidance of 80k-90k deliveries and expects to ramp automobile gross margins throughout 2016.

Reacting was Stifel Nicolaus analyst James Albertine, which reiterated a Buy rating on the stock, with a price target of $325, which implies an upside of 116.0% from current levels.

Albertine commented, “Initially we were positively surprised by TSLA’s reiteration of guidance which includes, (a) 80-90k units delivered in 2016, (b) timing related to the Model 3 prototype release and Gigafactory opening, and (c) gross margins of 30% for the Model S and 25% for Model X by year end ’16. We also noted customer deposits ticked higher sequentially, perhaps suggesting demand in tact.”

The analyst continued, “Our key questions for management involved further detail on free cash flow expectations, capital expenditure outlook ($1.5 bn vs. our current $1.25 bn model) and need to raise additional capital in FY16 near term (understanding management noted would not need to go to outside sources). We would also be interested in hearing how we should think about modeling Model 3 gross margin based on launch timing, production ramp, Gigafactory benefits, and additional launch costs expected.”

According to, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst James Albertine has a yearly average return of -10.2% and a 28.8% success rate. Albertine has a -28.6% average return when recommending TSLA, and is ranked #3258 out of 3569 analysts.

Out of the 13 analysts polled by TipRanks in the past 3 months, 5 rate Tesla Motors stock a Buy, 5 rate the stock a Hold and 3 recommend a Sell. With a return potential of 68.44%, the stock’s consensus target price stands at $253.45.

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