Cisco Systems, Inc. Could Unlock 50% Upside By Following eBay Inc Model

Cisco Systems, Inc. CSCO should follow the lead of eBay Inc EBAY, according to RBC Capital Markets analyst Mark Sue, by unlocking shareholder value via spinoffs.

Sue feels the fast growing wireless, security and data center segments, which generate more $10 billion annually and are growing at 15 to 20 percent rate, could be separated, thus attracting both growth and value investors. This could potentially unlock a higher stock price.

Sue feels the value side of Cisco is worth $22 to $24 per share, while the growth side should be valued at $9 to $11 per share. Add in the $6 in cash that is presently on the balance sheet, and Sue estimates a spinoff could drive Cisco's value to $37 to $41 per share, or 47 percent to 63 percent higher than Wednesday's closing price of $25.03.