Cisco Earnings Were 'Solid,' Wunderlich Says

In a report published Thursday, Wunderlich analysts maintained a Hold rating on

, with a price target of $29, after the company reported robust F3Q15 results. Cisco reported its non-GAAP EPS at $0.54, up from $0.51 in the previous quarter. The company's revenue came in at $12.1 billion, representing 5.1 percent y/y growth. The company had free cash flows of $2.7 billion, which constitutes 96 percent of its non-GAAP income. "After spending $1.0 billion to buy back shares and $1.1 billion on the dividend, net cash increased $0.9 billion/$0.19 per share to $33.4 billion/$6.49 per share, of which $2.6 billion is in the U.S," the analysts mentioned. The company's robust performance was driven by continued demand for newer switches and the emergency of the high-end router acceptance cycle. The company's book bill was "greater than 1 in a period that occasionally has fractional book bill," the analysts pointed out. A temporary halt in K-12 spending ahead of E-rate subsidies resulted in an exceptionally low order position from the US Service providers. Although the company expects to gain market share with its new router products, "this may be cold comfort for awhile since management does not expect service provider capital spending to recover until next calendar year," the report by Wunderlich mentioned. Cisco has guided to F4Q15 revenue growth of 1-3 percent and non-GAAP EPS of $0.55-$0.57. The analysts expect "the company to beat guidance for the last quarter of John Chambers' 20.5 year CEO tenure." The EPS estimate for FY15 has been raised from $2.15 to $2.18.