Cisco's Q3 and Outlook Hampered By Supply Chain Challenges; Lowering FVE to $54; Shares Undervalued

We are lowering our fair value estimate for narrow-moat Cisco Systems to $54 per share from $56 after its third-quarter results and outlook caused us to temper our outlook for growth. Cisco grossly missed our growth expectations in the third quarter, and its fourth quarter outlook was appreciably lower than we anticipated. Its shares were pushed down more than 10% after reporting due to the soft quarter and outlook. We view shares as attractive for long-term investors as we believe supply chain headwinds will eventually dissipate, while Cisco will remain an essential provider of IT necessities, a resilient operator, and a shareholder-focused firm.