Cisco’s Strong Q4 Beats Consensus, but Meets our Expectations, and We Retain Our $54 FVE

We maintain our $54 fair value estimate for Cisco Systems after the firm reported positive fiscal fourth-quarter results. Cisco’s top line topped quarterly guidance, and its initial guide for 2023 met our expectations. Demand for Cisco’s portfolio remains strong, with double-digit sequential order growth for commercial, enterprise, and public sector customers. Supply remains constrained, but shows signs of easing. We are positive on Cisco’s continued business model transition toward a greater mix of software and a subscription model. Annual recurring revenue continued to grow steadily, and subscription-based products like the Catalyst 9000 family and ThousandEyes performed well. Shares popped 5% following results and guidance that were above Factset consensus, and we now see shares as only modestly undervalued.