Cisco Systems Downgraded To Neutral: B Of A Analyst Expresses Concern Over High Street Estimates

B Of A Securities analyst Tal Liani downgraded Cisco Systems Inc. CSCO to Neutral from Buy at a price target of $56.

The analyst is concerned that the street estimate for CSCO's product revenue growth of 3% Y/Y (to $44.2 billion) in FY24 and 2% Y/Y (to $45.3 billion) in FY25 is much higher than the historical range of $36 billion-$39 billion on limited backlog support. 

Liani estimates product revenue of ~$43 billion in 2023, supported by a backlog drawdown of $5 billion-$6 billion, with an additional decline of around $4 billion in H1 2024. This will bring the backlog to its normal historical levels of $4 billion-$5 billion by H2 2024.

The analyst expects annualized product revenue to be within $3 billion-$6 billion, starting H2 2024, which is higher than the historical levels despite limited backlog growth. 

Liani reduced the estimate for product revenue to $43.3 billion (from $45.1 billion) in 2024 and $42.8 billion (from $47.0 billion) in 2025, 2% and 6% below the Street consensus, respectively.

Also ReadCisco Launches Power-Efficient Networking Chips, Takes on Broadcom and Marvell in AI Arena

Price Action: CSCO shares are trading lower by 2.48% at $50.83 on the last check Wednesday.

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
date
ticker
name
Price Target
Upside/Downside
Recommendation
Firm
Posted In: Analyst ColorEquitiesLarge CapNewsDowngradesPrice TargetMarketsAnalyst RatingsTrading IdeasBriefsExpert Ideas
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!