Sterne Agee Maintains a 'Buy' on Cisco (CSCO); Positive on NDS Acquisition

March 16, 2012 8:48 AM EDT Send to a Friend
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Price: $23.78 +0.89%

Rating Summary:
    31 Buy, 19 Hold, 3 Sell

Rating Trend: = Flat

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Sterne Agee maintains a 'Buy' on Cisco (NASDAQ: CSCO) price target of $27.00.

Analyst, Shaw Wu, said, "We view this deal favorably as it is margin and growth enhancing, not to mention helps advance the company's strategic initiatives. CSCO remains one of our top fundamental picks and we are buyers on weakness...From a financial perspective, NDS net margins look attractive in the 25% range vs. the CSCO corporate average of 21%, not to mention much higher than the 10% we estimate for the more commodity set-top box hardware business. We believe this is likely why CSCO commented that it expects this deal to be accretive in the first full year. In addition, CSCO gets to utilize the $47 billion in cash it has which is 90% overseas. This allows the company to invest without having to repatriate overseas cash and pay taxes."

"We continue to believe CSCO is an underappreciated turnaround story similar to what we have seen with Apple (Nasdaq: AAPL), IBM (NYSE: IBM), and EMC (NYSE: EMC) in the past."

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 $19.91 yesterday.


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