Cisco Systems (CSCO) Stock: $59 Price Target From Morgan Stanley

By Amit Chowdhry ● Nov 28, 2021
  • The shares of Cisco Systems Inc (NASDAQ: CSCO) have received a $59 price target from Morgan Stanley. These are the details.

The shares of Cisco Systems Inc (NASDAQ: CSCO) have received a $59 price target from Morgan Stanley. And Morgan Stanley analyst Meta Marshall is maintaining an “Equal Weight” rating on the company shares.

Marshall noted that that Cisco’s supply chain and costs are continuing to dampen the company’s demand resurgence.  And so Marshall said that the opportunities for earnings upside are being constrained in the near-term.

Marshall said that Cisco’s quarter largely played out to expectations. And Marshall sees green shoots in terms of hyperscale and service provider demand, but is continuing to be cautious of the interplay between product orders slowing year-over-year when supply chain overhang lifts towards the the first half of calendar 2022.

Earlier this month, Cisco reported its first quarter earnings. These were the highlights from the quarter:

— Total revenue was up 8% at $12.9 billion, with product revenue up 11% and service revenue up 1%. Revenue by geographic segment was: Americas up 5%, EMEA up 11%, and APJC up 15%. Product revenue performance was led by growth in Secure, Agile Networks up 10%, Internet for the Future up 46%, End-to-End Security up 4%, and Optimized Application Experiences up 18%. Hybrid Work was down 7%.

— On a GAAP basis, total gross margin, product gross margin, and service gross margin were 62.4%, 61.5%, and 65.2%, respectively, as compared with 63.6%, 62.7%, and 65.8%, respectively, in the first quarter of fiscal 2021.

— On a non-GAAP basis, total gross margin, product gross margin, and service gross margin were 64.5%, 63.8%, and 66.5%, respectively, as compared with 65.8%, 65.3%, and 67.1%, respectively, in the first quarter of fiscal 2021.

— Total gross margins by geographic segment were: 64.5% for the Americas, 64.4% for EMEA and 64.7% for APJC.

— On a GAAP basis, operating expenses were $4.6 billion, down 8%, and were 35.8% of revenue. Non-GAAP operating expenses were $4.0 billion, up 2%, and were 31.2% of revenue.

— GAAP operating income was $3.4 billion, up 34%, with GAAP operating margin of 26.7%. Non-GAAP operating income was $4.3 billion, up 10%, with non-GAAP operating margin at 33.3%.

— On a GAAP basis, net income was $3.0 billion, an increase of 37%, and EPS was $0.70, an increase of 37%. On a non-GAAP basis, net income was $3.5 billion, an increase of 8%, and EPS was $0.82, an increase of 8%.

— $3.4 billion for the first quarter of fiscal 2022, a decrease of 16% compared with $4.1 billion for the first quarter of fiscal 2021.

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