Cisco Systems, Inc. (CSCO) Excelling in Despite Tough Conditions

Cisco Systems, Inc. (NASDAQ:CSCO) releases its July quarter results next week, and Raymond James analysts are expecting to see some big positives in that report. Analysts Simon Leopold, Georgios Kyriakopoulos and Victor Chiu issued a report to investors this week maintaining their Outperform rating on the stock and raising their price target from $26 to $30 per share.

They agree with analysts at BMO Capital Markets, who also expect the company to post solid results.

Cisco Systems, Inc. (CSCO) Excelling in Despite Tough Conditions

Cisco Systems, Inc. (NASDAQ:CSCO)’s results to be on the high end of guidance

Analysts at Raymond James believe Cisco Systems, Inc. (NASDAQ:CSCO) will report July sales that are on the high end of the company’s guidance, which indicated an increase of between 4 and 7 percent. However, they note that federal spending cuts do provide some risk to this expectation. They believe though that federal spending will improve quarter over quarter in the company’s October quarter.

The analysts said even though the macro environment is still challenging, they believe Cisco is executing better than competitors, particularly because of the market share gains it has managed while also keeping margins stable.

Cisco Systems, Inc. (NASDAQ:CSCO)’s multiples could expand

They note that Cisco Systems, Inc. (NASDAQ:CSCO)’s multiples were compressed amidst investor worries about disruption from Software Defined Networking. However, they believe that as investors realize that SDN is a long-term evolution and that Cisco is playing a leading role in it, the company’s multiples will expand.

They like the company’s increased focus on software as it generated $6 billion in software last year and expects to hit $12 billion within the next three to five years. They believe the software focus is not only helpful for the company’s evolution but also good for its margins.

Questions for Cisco Systems, Inc. (NASDAQ:CSCO)’s report

When Cisco Systems, Inc. (NASDAQ:CSCO)’s report comes out next week, they’ll be looking for a few key items. First, they’ll want to analyze what the macroeconomic environment looks like. Second, they’ll be looking at carrier capital expenditure trends, and third, they’ll be looking into the impact of federal spending cuts on the company. They’ll also be checking for long-term growth of 5 to 7 percent.