UPDATE: Stifel Nicolaus Raises PT on Cisco Systems Following F1Q Results Report

In a report published Wednesday, Stifel Nicolaus analyst David Grossman reiterated a Buy rating on Cisco Systems CSCO, and raised the price target from $50.00 to $58.00.

In the report, Stifel Nicolaus noted, “CSC reported F1Q (Jun) last night. In sum, the company beat on EPS on lower revenue with the upside being driven primarily by better than expected gross margin (cost take out and contract performance). Consistent with the quarter, management raised EPS guidance $0.20 to a range of $3.50-$3.70 on better margin performance. We continue to believe the company can generate $5-6/sh in FCF on the current revenue base, which should support a $50-60 stock price. While there is still some upside at current levels without incremental revenue growth; we believe the primary catalyst is the prospect of renewed revenue growth. We do not expect to see growth in FY14 (Mar); however, we may see some improvement in commercial bookings in 2H (Federal Government Segment, or NPS, encumbered by sequestration). Efforts to accelerate growth are primarily focused on the reformulation of the sales function including incremental headcount (hunters) and the creation of “general managers” assigned to top 500 accounts with incentives in place to drive cross selling and higher revenue/client. As a reminder, 12 months ago when the new management team took over, less than 5% of the top 200 accounts were buying more than one service from CSC.”

Cisco Systems closed on Tuesday at $49.96.