Auriga Maintains a 'Buy' on Cisco (CSCO); New Acquisitions/Investments Signal Renewed Focus

Auriga maintains a 'Buy' on Cisco (NASDAQ: CSCO) price target of $24.00.

Auriga analyst said, "We maintain our rating and price target for Cisco following recent acquisitions/investments, which in our view suggest renewed focus on ASICs to offer more differentiated products and maintain/improve gross margins. Contrary to some investor perceptions that CSCO will move away from home grown ASICs, we think CSCO is doubling down on ASIC investments to ward off commoditization threats from merchant silicon and other industry trends like software defined networking (SDN). In our view, CSCO's acquisition of LightWire is a game-changer for the optical module industry as this move would eventually lead to CSCO building its own optical modules using CMOS based optical transceivers. Similarly, we view CSCO's recent investment in Insieme (private) as an indicator that its next generation data center fabric solution will be mostly based on ASICs, instead of merchant silicon. Despite dramatic ongoing changes in the networking industry, we continue to view CSCO as well positioned to provide differentiated and high margin products/services to its enterprise and service provider customers."

For an analyst ratings summary and ratings history on Cisco click here. For more ratings news on Cisco click here.

Shares of Cisco closed at $20.14 yesterday.

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