Cisco Takes 3 Steps Forward, 1 Step Back
The networking-equipment giant's near-term outlook is a moderate setback from improving results, but Cisco's overall health is fine, according to Morningstar's Grady Burkett.
Cisco Systems (CSCO) once again turned in results that were slightly ahead of management's forecast, with third-quarter revenue coming in at $11.6 billion and non-GAAP earnings of $0.48 per share. However, management's fourth-quarter revenue and earnings outlooks are below what our current model reflects, and we plan to lower our near-term forecasts.
We're also trimming our five-year growth assumption for Cisco's collaboration business to reflect our growing concerns over this segment's long-run competitive position. These adjustments will result in about a 10% reduction to our fair value estimate. Although Cisco's fourth-quarter outlook represents a moderate setback from a recent series of improving results, we think the firm's overall health is fine, and we maintain our view that Cisco's shares are attractively valued.
Grady Burkett does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
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