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Lazard Sidelined Into Cisco's (CSCO) Q3 Report; Cites Tough Macro Environment

May 13, 2013 12:41 PM EDT Send to a Friend
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Price: $25.97 --0%

Rating Summary:
    31 Buy, 19 Hold, 3 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 1 | Down: 0 | New: 0
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Cisco Systems (Nasdaq: CSCO) is higher on the session ahead of the company's third-quarter report, expected out after markets close on May 15th. Currently, the Street is looking for EPS of 49 cents on revs of $12.18 billion. Numbers compare with EPS of 48 cents and revs of $11.6 billion reported in the same period last year.

Lazard Capital is out with a few comments heading into the tape. The firm rates Cisco at Neutral and no price target.

Analyst Ryan Hutchinson and company said that recent channel feedback was largely mixed as macro pressures continue to weigh on demand. The analyst said, "We believe the company continues to execute despite numerous headwinds and expect inline F3Q results; however, we do see the possibility of a modest downward revision to the outlook."

Though revs are expected to fall in-line with the Street, Hutchinson sees upward bias to EPS results. He notes, "Checks suggest decent demand in the US enterprise and SP which will likely be offset by tougher conditions in EU and China as well as the Federal vertical. In terms of positives, we believe that switching remains stable, driven by positive impacts associated with data center upgrades and BYOD roll-outs."

Current views call for 2.6 percent of sequential growth, which is behind the historical seasonal average of 3.8 percent.

Hutchinson is on the sidelines into results, saying, "We continue to believe Cisco faces significant challenges within its core markets. That said, we believe the current valuation (10x our C2014E EPS) coupled with the company's recent dividend hike (current yield: 3.22%) should provide downside support."

Shares are up about 0.4 percent Monday.

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 $21.10 last Friday.




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