This Tech Analyst Expects A Beat Out Of Cisco

As Cisco Systems, Inc. (NASDAQ: CSCO) is preparing to announce its first-quarter results on November 16, Drexel Hamilton anticipates a beat quarter on the expectations of continued execution. While maintaining its Buy rating, the firm kept its target price of $37.00, implying an upside potential of over 15 percent from the current levels.

Analyst Brian White expects the sales and operating profit cycle of Cisco to continue, pointing out the solid execution track record. The analyst believes the stock presents a depressed valuation based on its EPS estimate for fiscal year 2017 and 3.3 percent dividend yield.

However, he expects investors to continue supporting the stock.

In a research note, the brokerage stated, “Trends across the tech supply chain as it relates to networking / telecom programs and demand within our networking coverage this earnings season were a bit healthier compared to a year ago. As such, we feel comfortable with the overall demand backdrop for Cisco but we also don't expect meaningful revenue upside.”

White expects Cisco to generate 5 percent lower revenue from NGN routing on a quarter-over-quarter basis. While newer products are expected to drop 6 percent, switching is predicted to remain flat. He sees other products and services delivering 6 percent and 1 percent lower revenue, respectively. On a year-over-year basis, revenue from switching and routing are expected to fall 6 percent and 1 percent, respectively. However, service sales are predicted to grow 8 percent.

For the first quarter, the analyst modeled EPS of $0.59 on revenue of $12.28 billion. As far as the second quarter, the brokerage expects EPS of $0.59 on revenue of $12.16 billion.

At last check, the stock was up 0.32 percent at $31.46.

Image Credit: By Figure8 (Own work) [CC BY-SA 3.0], via Wikimedia Commons