Cisco Earnings: We Trim Our Valuation 6% to $50 Behind Management’s Lowered Outlook

We trim our fair value estimate for wide-moat Cisco Systems to $50 per share, from $53, as weak guidance for the rest of fiscal 2024 leads us to reduce our short-term forecasts. Cisco continues to see lower demand as its large customers work through inventory stockpiles following two years of overordering. While we’d previously seen management’s expectations for a short-lived correction as rosy, new fiscal 2024 guidance is still well below our prior forecast. We remain fans of Cisco’s long-term position, with heady profits, cash flow, and a good dividend. The short term, however, looks weak. With a market selloff after the release commensurate with our valuation cut, we continue to see shares as close to fair value.