Evercore ISI Positive on Cisco (CSCO)
Evercore ISI analyst Amit Daryanani reiterated an Outperform rating and $55.00 price target on Cisco (NASDAQ: CSCO).
The analyst comments "Cisco reported a Apr-qtr that was better than expected on the top and bottom line, including a notable gross margin beat. The Jul-qtr guide looks largely in-line although Splunk integration makes it difficult to compare consensus numbers. Order numbers were a key positive in the quarter as they were flat (ex-Splunk) compared to a 12% decline in the prior quarter. Improving trajectory of orders remains a key bullish talking point and will add some confidence in Cisco’s ability to grow if they can show positive order growth in the Jul-qtr. Cisco also provided some initial commentary on FY25 that was lower than we expected as their revenue guide for low-to-mid single digit growth (consensus at 4%) implies Cisco ex-Splunk revenue is flat to up slightly. We think this could be conservative assuming order numbers continue to improve and the recovery in enterprise and service provider networking takes place as expected in 2H:CY24 and we start to see some incremental AI / Cloud revenues in H2 as well. The implied EPS guide of ~$3.50 for FY25 is below expectations of ~$3.70 due to Splunk dilution, interest expense, and lower than expected operating margins. Cisco continues to sound bullish on the AI opportunity and reiterated their expectation for $1B in AI Orders in FY25 – with room for likely upside here. Net/net: Expectations were low heading into the quarter and we think the improvement in order growth was the key positive in the quarter, which should give bulls something to focus on. Debate going forward will center on the FY25 guide and whether this is conservative (both in terms of growth and op margins) – given the strong order trajectory we suspect there is potential for upside in FY25 and beyond. Maintain Outperform & $55 target."
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Shares of Cisco closed at $49.67 yesterday.