- Goldman Sachs is adding Cisco Systems (NASDAQ:CSCO) to the Americas Conviction Buy List.
Three key points: 1) Cisco expects to gain share in routing market from major competitors over the next two years on the back of new product introductions. 2) Video on the network holds the potential to drive network traffic growth from 70-100% per year to 200-300%, a trend that would help underpin its long term growth rate for 3-5 years. 3) They believe that in 2008, there is the potential for greater operating leverage as Cisco will likely be able to reign in its pace of spending on sales. Firm's $29 price target implies 21% potential upside.
Catalysts: 1) November 8, 2006 - October quarterly results and forward guidance should support Cisco's growth outlook. 2) Evidence of new product traction in routing. 3) Share repurchase should boost earnings growth rate.
Firm's price target assumes a 20X multiple on FY2008 EPS of $1.42. They believe a 20X multiple is justified by Cisco's ability to grow sales 15-20% in FY2007 and 10-15% over the next 3-5 years.
Notablecalls: This is what RBC Capital had to say about CSCO this AM: Longer-term prospects remain strong for Cisco considering our view of router market acceleration and emerging market growth. Near-term, we are looking for broadly inline revenues for the seasonally weaker FY1Q07 which closed Saturday. And for a stock that is up almost 33% in the last three months we would wait for a better entry point considering our view that the company may post a book-to-bill less than 1.0.
I must say, Goldman sure has big set of cojones to recommend CSCO after the recent run-up. Don't see this as actionable. Sorry.
Three key points: 1) Cisco expects to gain share in routing market from major competitors over the next two years on the back of new product introductions. 2) Video on the network holds the potential to drive network traffic growth from 70-100% per year to 200-300%, a trend that would help underpin its long term growth rate for 3-5 years. 3) They believe that in 2008, there is the potential for greater operating leverage as Cisco will likely be able to reign in its pace of spending on sales. Firm's $29 price target implies 21% potential upside.
Catalysts: 1) November 8, 2006 - October quarterly results and forward guidance should support Cisco's growth outlook. 2) Evidence of new product traction in routing. 3) Share repurchase should boost earnings growth rate.
Firm's price target assumes a 20X multiple on FY2008 EPS of $1.42. They believe a 20X multiple is justified by Cisco's ability to grow sales 15-20% in FY2007 and 10-15% over the next 3-5 years.
Notablecalls: This is what RBC Capital had to say about CSCO this AM: Longer-term prospects remain strong for Cisco considering our view of router market acceleration and emerging market growth. Near-term, we are looking for broadly inline revenues for the seasonally weaker FY1Q07 which closed Saturday. And for a stock that is up almost 33% in the last three months we would wait for a better entry point considering our view that the company may post a book-to-bill less than 1.0.
I must say, Goldman sure has big set of cojones to recommend CSCO after the recent run-up. Don't see this as actionable. Sorry.
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