Cowen Analysts Expecting An In-Line Quarterly Report From Cisco

Although there are near-term concerns related to Cisco Systems, Inc. CSCO, the company’s longer-term outlook remains intact, Cowen’s Paul Silverstein said in a report. He maintained an Outperform rating on the company, with a price target of $39.

Cisco Systems is likely to meet or marginally beat the Street’s FY4Q16 PF EPS forecast of $0.60. Revenue should be at least in-line with the Street’s estimate of $12.6 billion.

Silverstein expects the company to announce its FY1Q17 EPS in-line with the Street’s estimate of $0.60, and its revenue guidance in-line or below the Street’s forecast of $12.5 billion.

Shares Have Downside Protection

“We see downside cushion provided by CSCO’s 3+% dividend yield and relatively modest valuation,” the analyst wrote, while adding, “We see our and consensus’ FY1Q17 revenue forecast as most at risk, but think CSCO can pull a number of levers—including, most notably, opex control and share count reduction—to offset any such weakness.”

NT Versus LT

There are near-term macroeconomic environment concerns. Silverstein added that “our own proprietary checks re CSCO’s enterprise business were once again mixed this quarter.” However, the longer-term outlook continues to be favorable, since Cisco has a leadership position in its key product markets.

Recent checks indicate ongoing improvement in Cisco’s security business. “We expect CSCO to benefit from the coming 25/100G data center switching upgrade cycle. And we expect to see ongoing improving collaboration and Telepresence video conferencing business,” the Cowen report stated.

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