UBS's Milunovich Raising Cisco Systems (CSCO) PT
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UBS analyst, Steven Milunovich, reiterated his Buy rating on shares of Cisco (NASDAQ: CSCO) and increased the price target to $35 on the belief that the valuation discount to comps should narrow.
The analyst does expect revenue growth of 3% to be at the lower end of the current 3-6% guidance, this still exceeds the consensus expectation of 2%. The operating margin should increase with a mix shift to software. The stock’s P/E has gone from a premium to a discount relative to a basket of comps, which does not seem entirely warranted as Cisco has less cloud vulnerability than other legacy names. Finally, the EV/FCF multiple is well below comps.
The PT increases to $35 from $32 on a target P/E revision from 13x to 14x F17E EPS.
Shares of Cisco closed at $30.85 yesterday.
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