Cisco Systems, Inc. (NASDAQ: CSCO) reported its
fiscal third-quarter results, which sent shares lower by
more than 4 percent -- a move investors should take advantage of, according to Baird.
The Analyst
Baird Equity Research's Jayson Noland maintains an Outperform rating on Cisco with an unchanged $51 price target.
The Thesis
Cisco's earnings
report was "solid" across nearly every measurable metric, but investors don't appear impressed with management's fourth-quarter
guidance, Noland said in a research report. Here is a summary of some of the notable takeaways:
- EPS of 66 cents was a penny better than expected.
- Revenue of $12.463 billion was better than the $12.432 billion expected and implies a 4 percent growth from a year ago.
- Gross margin fell 80 basis points from the prior quarter and 50 basis points from a year ago, but was attributed to a
negative shift in subscription revenue.
- Product revenue grew 5 percent due to growth in Infrastructure Platforms and Security.
- Adoption of the Cat 9K platform rose from 3,100 last quarter to 5,800, which makes it the fastest-ramping product in
history.
- The company repatriated $67 billion of cash and bought 140 million shares of its own stock.
- Overall, the quarter reinforces a view that Cisco remains " increasingly well positioned" to differentiate itself with its
intent-based architecture.
Price Action
Shares of Cisco were trading lower by more than 3.3 percent at $43.61 early Thursday afternoon.
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