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Cisco Earnings Preview: What Wall Street's Saying

ISI Technology Research analyst Brian Marshall - Neutral

"We expect a roughly in-line quarter for CSCO with the top and bottom lines both within guidance ranges (e.g., guidance of sales down 6-8% y/y and EPS of $0.47-0.49). Given widespread negative sentiment on the stock in the investment community, we see minimal downside risk from an in-line report and in-line guidance. We have many concerns that keep us on the sideline including margin pressure from alternative open networking solutions and lack of significant growth drivers outside the core routing/switching franchises. However, despite these issues, we continue to warm up to the CSCO story. While not as "open" as others, we believe CSCO is innovating on the product front and has a solid opportunity to retain the majority of its mainstream general enterprise installed base with more software-oriented, programmable products/technologies (e.g., Nexus 9k, APIC, etc.)."

UBS analyst Amitabh Passi - Buy, $26.50 price target

"For the earnings report, we believe in-line results with in-line guidance will be good enough as long as Cisco shows improvement in 3 key metrics: a) bookings, especially for Cisco's new platforms - NCS and ACI (incl. 9k), and in other key areas including security, mobility and datacentre; b) backlog; c) product gross margin, with UBSe GM of 59.1%, modestly above the 58.8% reported in F2Q. We believe Cisco will need to show progress on GM to comfort the bulls and assuage the bears. As evident in our forecasts, our growth expectations remain muted for the nearterm with Y/Y revenue declines of 7% and 6% for F3Q and 4Q, respectively, as we still foresee Cisco in a state of transition while the macro environment remains volatile."


>>Read More: Why Cisco Investors Should Be Patient

>>Read More: How to Trade Earnings for Cisco, Kohl's and Walmart, Plus 5 Others

-- Written by James Rogers in New York.

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