Cisco Systems (CSCO) Solid Quarter Despite Product Softness - UBS
UBS analyst, Steven Milunovich, raised his PT on Cisco (NASDAQ: CSCO) from $29 to $30 after Cisco's report, outlook, and tone were better than expected. Revenue grew 3% YoY while EPS of $0.57 exceeded expectations of $0.55. July quarter guidance of 0-3% and EPS of $0.59-0.61 also are ahead of consensus. The macro environment remains weak, but linearity returned to normal. The extra week boosted underlying 4% services growth to 11%. Product declines in switches (-3%) and routers (-5%) and meager 1% growth in data center were concerning but eased by double-digit order growth in data center switching.
The analyst expects Cisco to grow at the low end of its 3-6% long-run goal and views it as the best-positioned legacy vendor. No change to Buy rating, PT goes to $30 from $29 on 12.5x C16 EPS of $2.40
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Shares of Cisco closed at $26.72 yesterday.