Cisco Systems, Inc. (NASDAQ:CSCO) shares continued to dive after the company announced last night that it would slash 4,000 jobs. Shares fell as much as 7 percent during the regular trading day on Thursday, even though Cisco Systems, Inc. (NASDAQ:CSCO)’s latest quarterly results were in line with expectations. Nonetheless, analysts from at least two firms remain fairly positive on the company.
Cisco management was cautious
Analysts at both Wunderlich Securities and BMO Capital Markets make mention of the especially cautious tone of management at Cisco Systems, Inc. (NASDAQ:CSCO). They say this tone plus the job cuts likely scared investors because they indicate that the economy could be growing slower and less inconsistently than previously expected.
Analysts at both firms also note that while the company’s latest quarterly results and guidance were alright, and thus they aren’t changing their estimates much. However, they’ve both left their ratings and price targets the same.
BMO maintains Outperform rating on Cisco Systems
Analysts Tim Long and Ari Klein at BMO Capital Markets noted both good and bad trends in Cisco Systems, Inc. (NASDAQ:CSCO)’s most recently completed quarter. They saw solid results in the company’s U.S. enterprise business and recovery in Europe, the Middle East and Africa. They said the company’s book to bill was greater than 1 and that its switching and wireless business was strong as well.
In addition, the company posted strong cash flow, although that was offset by weakness in other areas, including routers, set-top boxes and services. There was also a year over year decline in backlog, and they believe that management’s cautious tone means recovery will take time.
The analysts adjusted their fiscal 2014 revenue from $51.1 billion to $50.7 billion and left their earnings per share estimate for the year at $2.14 per share. They added their fiscal 2015 year revenue estimate of $53 billion and earnings per share estimate of $2.26 to their numbers. Long and Klein maintained their Outperform rating and $29 per share price target on Cisco Systems, Inc. (NASDAQ:CSCO).
Wunderlich maintains Buy rating on Cisco Systems
Analyst Matthew S. Robison at Wunderlich Securities still rates the company as a Buy and also kept his $28 per share price target on the stock. He notes that the company’s gross margin was 10 basis points over the usual 61 to 62 percent guidance, although it was lower than earlier in the year. He said the company saw a mix shift from relative growth of lower margin blade servers. He also points out that the company’s SP video increased in the quarter because the company acquired NDS during the first quarter.
He said changes to his forecast are insufficient to change his price target.
