Argus analysts reiterate differing views on network equipment maker Cisco Systems, Inc. (NASDAQ:CSCO) and department store firm J C Penny Company Inc (NYSE:JCP), following a post-earnings report conference call with Cisco’s CEO and an analysis of JCP’s new sales initiatives, respectively. Let’s take a look at why these two giants have earned the ratings they received.
Cisco Systems, Inc.
Following Cisco’s announcement of its plans to buy CloudLock Inc., a user behavior focused private security platform, and a post-earning conference call with Cisco’s CEO, Argus analyst Jim Kelleher weighed in on the stock.
The analyst believes the company is building momentum following a post -3Q16 conference call with Cisco’s CEO, Chuck Robbins, who highlighted growth in security, collaboration, and data center efforts, which are compensating for slow growth in the company’s core routing and switching business.
In addition to posting strong quarterly results, the company’s announcement of its plans to acquire CloudLock Inc. makes sense to Kelleher, as Cisco transforms its efforts away from hardware-based assets towards efforts in software, could computing, and analytics. In addition, Cisco is teaming up with IBM’s Watson initiative in order to help stimulate partnerships between people and computers.
For fiscal 3Q16, Cisco reported earnings of $12 billion, a 0.17% improvement from consensus expectations.
Kelleher reiterates his Buy rating for CSCO with a price target of $34.00.
As usual, we like to include the analyst’s trackrecord when reporting on new analyst notes to give a perspective on the effect it has on stock performance. Kelleher is ranked #541 out of 4,013 analysts on TipRanks, where he achieved a trackrecord of 56% success rate and 6.3% average return.
The consensus target price for CSCO is $30.84, marking a 7.36% upside from current prices. 65% of analysts currently maintain a Buy rating for CSCO, while 30% issue a Hold rating, and the remaining 5% uphold a Sell rating for the stock.
J C Penny Company Inc
Amidst chronic struggles among department stores around the globe and JCP’s rollout of new sales initiatives, Argus analyst Christopher Graja weighs in on J.C. Penny reiterating his Hold rating on the stock.
The analyst sees a potential boost in sales for the retail giant as it begins to integrate plus sized clothing into its retail line, opens new Sephora locations, rolls out approximately 500 new appliance departments, and refreshes handbag, accessory, and jewelry departments in approximately 350 stores. The analyst includes that JCP is beginning to offer a wider variety of merchandise online and, in addition, has begun new pilot programs with Ashley Furniture and Empire home that could further boost home furnishing sales.
JCP has recently refinanced its secured term loan credit facility and extended maturity by 5 years. The analyst explains, “The new term loan is about $1.7 billion and the company issued $500 million of debt. JCP believes that this refinancing will reduce annual interest expense by approximately $24 million.”
The analyst upholds, “the path to creating shareholder value at JCP involves growing sales substantially faster than mall-based competitors.” This accelerated sales growth should improve the gross margins of the company in a highly competitive market and ultimately control expenses and help maintain proper inventories.
According to the analyst, J.C. Penny’s ability to stimulate sales is the largest unknown variable contributing to his hold rating. The analyst has not issued a price target for the stock.
Christopher Graja is a top performing analyst, according to TipRanks, with a success rate of 73% and an average return of 9.7%.
TipRanks analytics exhibit a consensus target price of $9.32 for JCP, marking a 9.13% upside from current prices. 25% of analysts maintain a Buy rating for JCP while 58% issue a Hold rating, and the remaining 17% uphold a Sell rating for the stock.