Early Wall Street Reactions To Cisco's Impressive Earnings
Several analysts offered an early analysis of the print.
William Blair: Strong Quarter, Bullish Outlook
Jason Ader of William Blair commented in a note that Cisco's "strong" quarter and "bullish" commentary around product refreshes across the portfolio marks a "good start" to Chuck Robbins regime as CEO.
Ader said there were numerous indicators of a "healthy forward outlook" including a book-to-bill "well above" 1, product orders up 4 percent, product deferred revenue up 21 percent, healthy margins and cash generation and shareholder-friendly capital return policies.
Bottom line, Cisco continues to "execute well" in a "volatile" environment with "solid" performances across virtually the entire portfolio. The company does face known macroeconomic-induced headwinds, but it is nevertheless well-positioned technology and likely considering acquisitions to improve key product areas.
Shares remain Outperform rated with no assigned price target.
RBC: A ‘Newer' Cisco
Mark Sue of RBC Capital Markets commented in a note that there is a "new sense of urgency" at Cisco given an improved bookings and stronger deferred revenue growth at a time when other large-cap tech peers are showing declining revenues.
Sue said Cisco's results and outlook were "ahead of legacy tech peers." In addition, the company's gross margin rate of 62.1 percent and operating margin rate of 29.3 percent have further room to improve as the company continues to assume a "more disciplined" approach to invest in key growth areas while "dialing back somewhat" on low-growth markets.
Shares remain Outperform rated with an unchanged $33 price target.
Wunderlich: ‘Steady As She Goes With New Captain'
Matthew Robison of Wunderlich commented in a note that Cisco reported "solid" results although orders rising by 4 percent was not enough to overcome the first-quarter deficit with year-end backlog down $0.3 billion to $5.1 billion.
Robison also noted that Service Providers orders "finally" grew while Commercial orders rose 11 percent year-over-year. In addition, Cisco's cash flow for the quarter was "strong," but at the end of the day "there is not much else to qualify as a significantly incremental catalyst."
Shares remain Hold rated with an unchanged $29 price target.
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