Take Advantage Of Cisco's Sell-Off, Baird Says

Cisco Systems, Inc. CSCO reported its fiscal third-quarter results, which sent shares lower by more than 4 percent -- a move investors should take advantage of, according to Baird.

The Analyst

Baird Equity Research's Jayson Noland maintains an Outperform rating on Cisco with an unchanged $51 price target.

The Thesis

Cisco's earnings report was "solid" across nearly every measurable metric, but investors don't appear impressed with management's fourth-quarter guidance, Noland said in a research report. Here is a summary of some of the notable takeaways:

• EPS of 66 cents was a penny better than expected.
• Revenue of $12.463 billion was better than the $12.432 billion expected and implies a 4 percent growth from a year ago.
• Gross margin fell 80 basis points from the prior quarter and 50 basis points from a year ago, but was attributed to a negative shift in subscription revenue.
• Product revenue grew 5 percent due to growth in Infrastructure Platforms and Security.
• Adoption of the Cat 9K platform rose from 3,100 last quarter to 5,800, which makes it the fastest-ramping product in history.
• The company repatriated $67 billion of cash and bought 140 million shares of its own stock.
• Overall, the quarter reinforces a view that Cisco remains " increasingly well positioned" to differentiate itself with its intent-based architecture.

Price Action

Shares of Cisco were trading lower by more than 3.3 percent at $43.61 early Thursday afternoon.

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