UBS Remains Bullish on Cisco Systems (CSCO) Following 4Q15
UBS reiterated a Buy rating and $33.00 price target on Cisco (NASDAQ: CSCO) following the release of the company's 4Q15 earnings results. EPS of $0.59 beat consensus estimates by $0.03. Revenues of $12.8B compared to the consensus estimate of $12.6B.
Analyst Amitabh Passi commented, "Cisco delivered a good set of results, beating F4Q estimates and guiding in-line for F1Q. Y/Y orders were up 4% vs. +2% in F3Q and +5%in F2Q. The two focus areas for clients after-hours were a) the decline in backlog y/y and b) decelerating trends in enterprise. While backlog did decline y/y, it grew q/q (UBSe +$600m). Additionally, orders were up q/q in the high single-digit-to-low-teens range (UBSe) with better linearity and consistent with seasonal trends. More impressively, product deferred revenues grew 10% q/q and 20% y/y to $5.4b, setting a new record for Cisco. We believe investors should pay attention to a combination of backlog and deferred revenues (figure 2). For us, what was marginally disappointing were the trends in Security (+4% y/y) and Data Center (+14%), though management remains optimistic on the outlook. In Security, the shift to software is having some impact on top-line revenue numbers with 46% of security bookings now software. Management foresees a return to double-digit revenue growth in Security in 2HFY16. Maintain Buy rating."
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Shares of Cisco closed at $27.90 yesterday.