One glance at Cisco’s stock chart over the past year (included with this post) – and even more impressively over the last 5 (check out Yahoo! Finance) – shows that Wall Street is once again enthralled with the John Chambers networking show.
Cisco (Nasdaq: CSCO) shares surged 9.4 percent to close at $29.46 on Thursday, up $2.53.
In heavy trading at 117 million shares, which was nearly four times the daily average, CSCO at one point hit a 52-week high of $29.58.
That was the high-water mark for CSO dating back to a $27-28 range in April of 2010. (Seeking Alpha says it was a high going back eight years.)
Just how far back has Cisco rallied? On July 31, 2011, Cisco shares traded at a low of $16.08.
If as an investor you kept faith in Cisco, you are much richer today.
A Chorus Line of Praise
While analysts praised Cisco in a big chorus after Wednesday’s results and Chambers’ bravo sales pitch to analysts, few of the headlines about Chambers’ presentation and Cisco’s upbeat financials even mention the deep reorganization of the company that led to thousands of layoffs (including more than 200 in the Triangle) and the shedding of more than 30 percent of its managers. Chambers highlighted that reboot figure in the conference call.
Instead, the headlines and the analysts focused on Cisco’s improving revenues, its new products, and a revitalized Chambers.Of course, they also realize that Cisco probably wouldn’t be bouncing back had that massive “reorg” not occurred.
The Cisco Broadway salute was led by CNBC’s Jim Cramer, who predicted Cisco stock will soon return to $35 a year. If you want to get digitized, he says, call Cisco. Joining Cramer in rosy predictions were a host of analysts.
Here’s a roundup of analysts comments as published by The Street.com and SeekingAlpha:
- Oppenheimer: “Cisco reported solid Dec. quarterly results beating top and bottom line consensus, and offered equally solid guidance for the April quarter, despite continued caution on emerging markets and service provider spending. We came away from the call with greater confidence in Cisco’s technology leadership, execution and recovery trajectory. … We maintain our Outperform rating. Raise price target to $30 from $29 and raise estimates to reflect results and guidance.”
- Pacific Crest Securities: “Upside on the highest product growth in three years and a bullish tone on new products gaining mindshare with large customers could continue to elevate CSCO shares into Mobile World Congress next month. We see fair-value range of $27 to $30.”
- Credit Suisse: “Revenues were above the Street’s estimates at $11.9bn (7% y/y, -2.5% q/q), with GMs at 61.7%, better than expected. Guidance was also reassuring with revenues at $12.0bn and EPS of $0.52 at the midpoint. While it’s worth noting that such results come against a period of easy comparisons, we believe that execution has been solid. We raise our FY15/FY16 EPS estimates by 4%/3% to $2.13/$2.02 and acknowledge that near term, the shares may perform well. However, we still believe that the secular impact of SDN [software defined netowrking] will become more meaningful over the next 12-18 months, and retain our UNDERPERFORM rating.”
- Citigroup, which rates Cisco as a sell: “While Cisco’s business appears to be recovering, we continue to believe it remains a very low single-digit grower with no upside to op margin and tough comps ahead. We therefore believe the current 13x P/E more than compensates for this profile, a 3% dividend and buy-back. Raising PT to $25 from $22 …”
- Cantor Fitzgerald: “In our view, Cisco’s tone was upbeat on last night’s call and largely driven by the company’s continued strong execution and favorable product cycle; however, the company was quick to call out caution as it relates to carrier spending and trends in emerging markets.”
- William Blair: “While Cisco clearly benefited from easy comparisons across its business and several major product cycles, we nonetheless walked away with increased confidence in the company’s business momentum, growth prospects and strategic positioning.”
- Sterne Agee: “The biggest takeaway that should drive incremental support in the stock near term is the improving tone on emerging markets (India plus 11%, Mexico plus 21%) along with U.S. commercial strength up 12% against a relatively tough comp (total Americas up 7% along with EMEA up 7%).”