Cisco (CSCO) Headed Back to Double-Digit Growth; Buy the Stock - Nomura
Nomura Securities analyst Stuart Jeffrey reiterated a Buy rating and raised his price target on Cisco (NASDAQ: CSCO) to $27.00 (from $24.50) following solid Q3 results and outlook. The analyst is positive as the company appears headed back to double-digit growth.
Jeffrey commented, "Cisco showed concrete signs that the drivers of the shock revenue miss from the January quarter are starting to moderate and in some cases reverse. Combined with strong gross margin improvements, cash generation and continued cash returns, we see scope for the stock to see further upside to $27 and retain our Buy rating. We see a Clear path to double-digit revenue growth from early 2015. Margin recovery highlights efficiency levers. On a 20% discount to the market PE (below the 15% discount for large cap tech) we see fair value for Cisco at $27 (11.4x CY2015E EPS of $2.36). Given the positive momentum likely in estimates as well as this valuation backdrop, we retain our Buy rating on the stock."
The firm raised FY14E EPS from $1.97 to $2.04; FY15E EPS from $2.13 to $2.25.
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Shares of Cisco closed at $22.81 yesterday.