Cisco Analysts On COVID-19 Recovery, Challenges, Valuation After Q2 Print

Cisco Analysts On COVID-19 Recovery, Challenges, Valuation After Q2 Print

Cisco Systems, Inc. CSCO reported second-quarter results late Wednesday that came in ahead of expectations. Here's what the Street has to say. 

The Cisco Analysts: Morgan Stanley analyst Meta Marshall maintained an Overweight rating and $54 price target for Cisco shares.

Raymond James analyst Simon Leopold maintained an Outperform rating and nudged the price target from $49 to $50.

Needham analyst Alex Henderson maintained a Hold rating.

KeyBanc Capital Markets analyst Alex Kurtz maintained a Sector Weight rating.

Cisco Positioned For 2021 Recovery, Morgan Stanley Says: Cisco reported modest upside to Morgan Stanley's estimates as demand slowly recovers, Marshall said.  

"CSCO is our preferred way to capture upside with return to work, a recovering macro environment more broadly, and closing of a valuation gap that remains too steep relative to the S&P 500," the analyst said. 

The commentary around expectations for enterprise networking needs in a hybrid work environment is encouraging, along with improving product orders, she said. 

The second quarter will likely be Cisco's last challenging quarter, with difficult compares on back of a strong IT spending environment in the prior year, Marshall said.

The second half could see high single-digit growth thanks to easier comparisons, the pending acquisition of Acacia and IMImobile, and one-year-plus delayed enterprise project activity, the analyst said. 

Although Enterprise remains the laggard, an improving trajectory in commercial business is a positive sign that demand is positioned for recovery as employees return to work, according to Morgan Stanley. 

Why Raymond James Continues To Like Cisco: The negative stock reaction to Cisco's earnings may have to do with the April quarter guidance, which looks inadequate considering the fact that the quarter has an extra week, Leopold said.

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