UBS analyst Amitabh Passi (Buy, $26.50 PT)
"As we have written before, we believe Cisco still has levers it can pull to enhance returns and better manage the key transitions around cloud, mobile, social. ROIC, ROE took a step down in 2008-2009, and employee productivity has declined from the peaks in CY1H12. While ROE is now hovering at ~20%, we believe further workforce rationalization and supply chain optimization, as well as a more software-centric mix, is required to enhance returns (see charts in note). In addition to a focus on costs, we believe Cisco can reaccelerate sales growth over the next few qtrs via product ramps (ACI, NCS, 40g (bi-di)), a greater focus on SMB, and penetrating new multi-billion dollar markets e.g. packet-optical (NCS 4k). Cisco's cloud (Intercloud) and SaaS strategy need to be further firmed up, with M&A in software, services, analytics, IoE being key."
Goldman Sachs analyst Simon Jankowski (Buy, $29 PT)
"We expect Cisco’s results and guidance to be in line to modestly above consensus, with book to bill above one, as the company begins to see the benefits of its switching and routing product cycles. We expect further acceleration into 2H, aided by easy comps and improving end demand in the enterprise and public sector verticals."
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Credit Suisse analyst Kulbinder Garcha (Underperform, $20 PT)
"We forecast F4Q14 revenues of $12.1bn (-2% y/y, 6% q/q) and EPS of $0.53 compared to consensus revenues of $12.1bn and EPS of $0.53. Cisco will be challenged by macro conditions in emerging markets and the emergence of SDN will create continued headwinds for the company. We reiterate our Underperform and $20 price target."
Wells Fargo analyst Jess Lubert (Outperform, $27 to $29 PT)
"We expect Cisco to report solid FQ4 results, with continued strength in North America and Europe likely to more than offset ongoing challenges in the emerging markets. We think margins are likely to at least meet our estimates behind improved volumes and stable pricing. Despite geopolitical uncertainty in several emerging markets and the potential to see lumpiness in the service provider vertical, we believe strong execution, the ramp of several important new products and improved enterprise conditions in the developed theatres should enable the company to guide in line with consensus for the seasonally difficult October period. Importantly, with Cisco likely to return to growth over the next few quarters, and the stock continuing to offer an attractive combination of valuation and yield, we continue to see value in the name at current levels."
--Written by Chris Ciaccia in New York
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