Wednesday, October 10, 2007

Cisco Systems (NASDAQ:CSCO): Actionable trading call Alert from Goldman!

- Goldman Sachs is taking Cisco Systems' (NASDAQ:CSCO) tgt to $40 (from $37) saying they are taking a more bullish stance on Cisco's multiple, based on their view of the sustainability of the company's growth in the mid to high teens. Additionally, results are in for the 36th issue of GSCO's IT Spending Survey series, conducted in mid-August 2007. Results for corporate networking and Cisco were both positive.

2 key points: 1) GSCO believes that Cisco's will trade at a 19-20x PE multiple 12 months from now, as the company will demonstrate to investors an ability to sustain its top-line growth at a 16%+ level through 2009.

2) Firm's positive outlook is reinforced by the results of their proprietary IT survey. Fifty-six percent of respondents expect to increase spending with Cisco over the next 12 months. Historically 50%-70% range has been a positive indicator for Cisco's outlook. The 12-month forward outlook for corporate network spending looks positive with 68% of respondents surveyed expect to increase their spending over the next 12 months vs. 69% in prior survey.

Maintains Buy.

Notablecalls: This is a pretty significant call from GSCO as $40 is the Street high tgt. Most other major firms still have their tgts in the $35 range and I suspect GSCO's call will give them confidence to go higher. This will create another round of buying, likely pushing the stock to a new 52-week high.

Sitting at my old desk, I would be all over CSCO in the pre-market, scooping up any size offered within the 20-30c range. This one's going higher, baby! Actionable Trading Call Alert!

No comments: