Piper Jaffray Expects Cisco (CSCO) to Guide Down; Reduces PT

Piper Jaffray analyst, Troy Jensen, believes that Cisco (NASDAQ: CSCO) is benefiting from a switching upgrade cycle but following the weaker 4Q15 Networking survey results and conversations with large Cisco resellers, he has become more cautious on the company’s near term outlook.

Piper Jaffray expects CSCO to report results in-line with the company’s FQ2 revenue ($11.6 – 11.8B) and EPS ($0.53-0.55) guidance, but he now expects the company to guide FQ3 below consensus. For FQ3, he reduced the revenue estimate from $12.3B to $11.9B, which is ~$158 million below consensus estimates.

Historically, Piper Jaffray's CSCO survey results have been heavily weighted with above plan responses versus below plan, but this quarter the results were more balanced. In 4Q15, 32% (6) of VARs reported an above plan quarter versus 21% (4) indicating they were below plan. The remaining 47% (9) of resellers indicated the quarter was in-line with expectations. This compares to 3Q15, where 35% (7) were above, 15% (3) were below and 50% (10) were in-line with expectations.

The analyst remains Overweight on CSCO shares, but lowered his price target from $31 to $30, 11.0x fully-taxed CY16 operating income assumption plus cash.

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 $23.85 yesterday.

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