Cisco (CSCO) Looks To Make The Right Connection In Q2
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Cisco (NASDAQ: CSCO) shares are trading higher ahead of the company's second quarter earnings report, expected after the market closes on Wednesday, February 3, 2010. Shares are up 0.19% to $22.92.
Cisco is expected to report Q110 EPS of $0.35 on revs of $9.40 billion. For Q110, Cisco reported an EPS of $0.36 and revs of $9 billion, both beating estimates. A year ago, for Q209, Cisco posted an EPS of $0.32 and revs of $9.1 billion, again, both beating the Street views.
Cisco shares have been relatively flat through the quarter, gaining only about 1.7%. Shares ended 2009 up about 46.9%. The stock is down about 5% YTD so far.
Cisco is also trading currently at a 15.8x P/E for FY10 estimates, and only 13.9x FY11 estimates. For comparison, Hewlett-Packard (NYSE: HPQ) is at 11x FY10 P/E, Juniper Networks (NASDAQ: JNPR) is at 21.8x, and Alcatel-Lucent (NYSE: ALU) is trading at 17.7x.
Data from Bloomberg has 35 analysts with a Buy rating on CSCO, 8 with a Hold, and 1 recommend to Sell the stock. The analysts price consensus is $27.62. The "Street high" price is $32, and the low is $23.
ANALYST RATINGS THROUGH Q210:
In October, Wedbush Morgan raised its price target on CSCO from $22 to $25, also maintaining a Neutral rating.
Piper Jaffray & Co. reiterates an Overweight rating on Cisco, price target increased to $27 from $25.
Auriga reiterates a 'Hold' rating and raised their price target by $1 to $23.
William Blair upgraded Cisco from Market Perform to Outperform.
Wells Fargo resumes coverage with an Outperform rating and $26-28 valuation range. Click Here for more color.
In November, Davenport upgrades to Buy, price target $28.
In December, Broadpoint.AmTech upgraded Cisco to Buy from Neutral, and price target of $29. The firm sees CSCO returning to revenue and earnings growth in January 2010.
BMO Capital upgrades from Market Perform to Outperform. Price target increased from $25 to $30.
NEWS THROUGH Q409:
Cisco, and its rivals, are all aiming to be a one-stop shop in one form or another. The tail-end of 2009 saw some good M&A action within the industry, and the trend doesn't look like it's going to slow down through 2010 as companies are seeing good chunks of free cash flow on their books after a dismal 2008 berated company's balance sheets in red ink, forcing downsizing and asset clearing. "Don't forget to close the door on the waaaaaay out," company's said to 2008. "And put my wallet back on the table before you leave!" they concluded.
That said, in early October, Cisco announced an agreement to acquirefor Tandberg at $3 billion. Cisco ended up sweetening the Tandberg bid by offering $3.4 billion.
CSCO then, in mid-October, announced that they would purchase Starent Networks (NASDAQ: STAR) for $35/share, about $2.9 billion.
Late October, Cisco announces plans to acquire ScanSafe.
Why spend so much money on merging, when you can just do an awesome joint venture to bring the next-gen of virtual computing to the people? Exactly, that's what Cisco thought when it participated in forming the Virtual Computing Environment Coalition with EMC (NYSE: EMC) and VMWare (NYSE: VMW).
Rumors circulated through the quarter that CSCO might like to purchase EMC, which by the way controls much of VMWare.
That's where Q210 ends...
WRAP UP
The top line, or sales, at Cisco will be key this quarter. Cisco is saying that it expects its first Y/Y sales increase since January 2009, and whispers have revs at $9.2 - $9.5 billion. Investors want to see the ability to grow both the bottom and top line to justify a higher multiple in this still uncertain economy. If Cisco delivers, investors will likely put more money to work in the company.
Cisco will issue its Q409 results via press release at approximately 4:00 PM (EST) on February 3, 2010. Stay tuned to StreetInsider.comcom's Earnings section to see our analysis of the highly-anticipated quarterly results within seconds of their release.
Cisco is expected to report Q110 EPS of $0.35 on revs of $9.40 billion. For Q110, Cisco reported an EPS of $0.36 and revs of $9 billion, both beating estimates. A year ago, for Q209, Cisco posted an EPS of $0.32 and revs of $9.1 billion, again, both beating the Street views.
Cisco shares have been relatively flat through the quarter, gaining only about 1.7%. Shares ended 2009 up about 46.9%. The stock is down about 5% YTD so far.
Cisco is also trading currently at a 15.8x P/E for FY10 estimates, and only 13.9x FY11 estimates. For comparison, Hewlett-Packard (NYSE: HPQ) is at 11x FY10 P/E, Juniper Networks (NASDAQ: JNPR) is at 21.8x, and Alcatel-Lucent (NYSE: ALU) is trading at 17.7x.
Data from Bloomberg has 35 analysts with a Buy rating on CSCO, 8 with a Hold, and 1 recommend to Sell the stock. The analysts price consensus is $27.62. The "Street high" price is $32, and the low is $23.
ANALYST RATINGS THROUGH Q210:
In October, Wedbush Morgan raised its price target on CSCO from $22 to $25, also maintaining a Neutral rating.
Piper Jaffray & Co. reiterates an Overweight rating on Cisco, price target increased to $27 from $25.
Auriga reiterates a 'Hold' rating and raised their price target by $1 to $23.
William Blair upgraded Cisco from Market Perform to Outperform.
Wells Fargo resumes coverage with an Outperform rating and $26-28 valuation range. Click Here for more color.
In November, Davenport upgrades to Buy, price target $28.
In December, Broadpoint.AmTech upgraded Cisco to Buy from Neutral, and price target of $29. The firm sees CSCO returning to revenue and earnings growth in January 2010.
BMO Capital upgrades from Market Perform to Outperform. Price target increased from $25 to $30.
NEWS THROUGH Q409:
Cisco, and its rivals, are all aiming to be a one-stop shop in one form or another. The tail-end of 2009 saw some good M&A action within the industry, and the trend doesn't look like it's going to slow down through 2010 as companies are seeing good chunks of free cash flow on their books after a dismal 2008 berated company's balance sheets in red ink, forcing downsizing and asset clearing. "Don't forget to close the door on the waaaaaay out," company's said to 2008. "And put my wallet back on the table before you leave!" they concluded.
That said, in early October, Cisco announced an agreement to acquirefor Tandberg at $3 billion. Cisco ended up sweetening the Tandberg bid by offering $3.4 billion.
CSCO then, in mid-October, announced that they would purchase Starent Networks (NASDAQ: STAR) for $35/share, about $2.9 billion.
Late October, Cisco announces plans to acquire ScanSafe.
Why spend so much money on merging, when you can just do an awesome joint venture to bring the next-gen of virtual computing to the people? Exactly, that's what Cisco thought when it participated in forming the Virtual Computing Environment Coalition with EMC (NYSE: EMC) and VMWare (NYSE: VMW).
Rumors circulated through the quarter that CSCO might like to purchase EMC, which by the way controls much of VMWare.
That's where Q210 ends...
WRAP UP
The top line, or sales, at Cisco will be key this quarter. Cisco is saying that it expects its first Y/Y sales increase since January 2009, and whispers have revs at $9.2 - $9.5 billion. Investors want to see the ability to grow both the bottom and top line to justify a higher multiple in this still uncertain economy. If Cisco delivers, investors will likely put more money to work in the company.
Cisco will issue its Q409 results via press release at approximately 4:00 PM (EST) on February 3, 2010. Stay tuned to StreetInsider.comcom's Earnings section to see our analysis of the highly-anticipated quarterly results within seconds of their release.
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