Cantor Fitzgerald’s analysts are reportedly attending Cisco Systems, Inc. (NASDAQ:CSCO)’s annual Financial Analyst Conference (FAC) today in NYC, and Frank Calderoni (CFO) delivered the company’s financial presentation, which included reduced growth targets.

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Cisco lowers rev growth target

During Frank Calderoni’s financial presentation this morning, Cisco lowered its long-term revenue growth outlook to 3-6% over the next 3-5 years from prior expectations of up 5-7%. Last week, analysts indicated that Cisco Systems, Inc. (NASDAQ:CSCO)’s growth over the past three years through their FY:14 estimate equates to just 2% per annum, making the 5-7% annual growth target difficult to achieve. Analysts believe the lower end of Cisco’s revised growth target of up 3-6% is reasonable; however, they continue to believe the company should pull its sales growth objectives and focus on profit growth.

Breaking down revenue growth at Cisco

Cisco Systems, Inc. (NASDAQ:CSCO) expects sales in the data center to grow by 20-25% over the next 3-5 years from $2 billion in FY:13, and cloud is targeted at 12-18% annual sales growth over the next 3-5 years from $4 billion in FY:13, while mobility is expected to increase by 9-13% per annum from $3 billion in FY:13.

Security is targeted at 10-15% annual sales growth over the next 3-5 years from the $1 billion in revenue generated in FY:13, and service revenue is expected to grow by 7-10% per annum from $11 billion in FY:13.

Emerging market sales are projected to grow by 6-10% per annum over the next 3-5 years from $10 billion in FY:13. Software sales are expected to increase by 10-15% per annum over the next 3-5 years from $8 billion in FY:13. Finally, the core businesses (i.e., switching and routing) is projected to grow by just 0-1% over the next 3-5 years.

Cisco maintains operating margin objective but lowers EPS

In terms of profitability, Cisco maintained its operating margin target in the high-20% range (vs. 28.1% in FY:13) over the next 3-5 years, and Cisco Systems, Inc. (NASDAQ:CSCO) remains committed to an attractive return of cash to shareholders. That said, Cisco Systems, Inc. (NASDAQ:CSCO) lowered its annual EPS growth guidance to up 5-7% growth over the next 3-5 years versus prior expectations of annual EPS growth of 7-9%, and analysts at Cantor believe this lowered guidance is more reasonable and achievable.

Cisco Systems’ valuation

Cantor’s price target of $26.00 is based on nearly 11x firm’s CY:14 pro forma EPS estimate (adjusted for interest income/expense), plus Cisco Systems, Inc. (NASDAQ:CSCO)’s net cash per share of $5.89.