Auriga Maintains a 'Hold' on Cisco (CSCO); Expecting Continued Margin and Growth Pressures

Auriga maintains a 'Hold' on Cisco (NASDAQ: CSCO), lowers PT from $19 to $16.

Auriga analyst says, "We maintain our Rating on Cisco CSCO, but reduce our price target to $16 as we expect growth and margin pressures to continue due to commoditization trends in switching and intensifying competition in routing. We continue to believe that commoditization of switching is a long-term trend, which will negatively impact CSCO’s gross margins for an extended period of time. Our analysis also shows that larger cloud deployments will favor best-of-breed products in segments like WAN Optimization, Security and Application Delivery, which could lead to market share losses for CSCO. Improved execution could lead to better competitive positioning for Nexus7000 and ASR9000, but we don’t expect those tailwinds to completely offset other negative trends. As a result, we have further reduced our FY12 estimates and continue to favor merchant silicon vendors like Broadcom (Nasdaq: BRCM)(Buy) and Marvell (Nasdaq: MRVL)(Buy), which are better positioned to benefit from switching commoditization trends."

For more ratings news on Cisco click here and for the rating history of Cisco click here.

Shares of Cisco closed at $14.93 yesterday.

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