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Cisco (CSCO) Guidance Better Than Feared - BMO

February 11, 2016 7:31 AM EST
Get Alerts CSCO Hot Sheet
Price: $49.77 --0%

Rating Summary:
    26 Buy, 30 Hold, 1 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 9 | Down: 7 | New: 10
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BMO Capital analyst, Tim Long, thinks Cisco's (NASDAQ: CSCO) guidance was better than people were expecting despite comments that business has slowed in the first weeks of January. With a 4% dividend yield and strong cash flows, the reward is greater than the near term risk. no change to Outperform rating but the PT drops to $30 from $33.

Cisco reported results that were better than expected, with both revenue and gross margins topping our views. Cisco’s results did show some softness in the enterprise segment, as many peer companies have discussed, but Service Provider was strong and emerging markets are rebounding. Operating margins were at a 10-year high. Some may be concerned by management’s comments that the macro affected business in the first few weeks of January, but he still expects growth despite these pressures.

Cash flow in the quarter of $3.9 billion exceeded estimates. Management is increasing the dividend by 24% to reach a 4.5% yield, and has added $15 billion to the buyback program. The combination of low-single-digit growth and a 4%-plus dividend yield is rare in tech, particularly for a company of this size.

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 $22.51 yesterday.



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