From Tech Trader Daily:
Cisco: Goldman Ups To Buy, $21 Target; Sales, Margins To Improve
Shares of Cisco Systems (CSCO) are up 61 cents, or 4%, at $16.30 after Goldman Sachs analyst Simona Jankowski today raised her rating on the stock to Buy from Neutrla, with a $21 price target, writing that Street estimates for the company are finally “at the beginning of a multi-quarter upward estimate revision cycle.”
In particular, Jankowski thinks the Street’s $1.71 EPS estimate for next fiscal year is too low, and that the company can deliver more like $1.80, as sales growth is probably in the process of bottoming this fiscal Q4 ending this month, at flat to up 2%, and will “re-expand” from there, perhaps to 5% to 7% on a normalized basis.
She also thinks the Street is not giving enough credit to Cisco’s restructuring efforts, which can improve fiscal 2012 EPS by 5% to 10%, she thinks. Gross margin, too, will probably hit bottom in calendar 2012, as Cisco moves through the transition from the Catalyst 6500 product line to its new “Nexus 7000″ switches, and as it absorbs the full impact of price competition from Hewlett-Packard (HPQ).Also at TTD:
Jankowski’s $21 target represents a P/E of 11 times her calendar EPS estimate of $1.90....MORE
Cisco Was Right, Says Sterne Agee: Lousy Market