Joining a flurry of positive Cisco Systems (CSCO) notes, Deutsche Bank’s Brian Modoff writes Monday that he expects Cisco to report a “beat and raise quarter when it discusses fiscal Q4 results on August 5, based on modest sequential growth that Modoff is seeing in among Cisco’s larger enterprise and telecom carrier customers.
“Our recent round of reseller and Cisco customer checks suggest sales stabilization and modest improvement in the order pipeline, for Cisco’s enterprise and service provider gear and services,” writes Modoff, “especially in North America, [Latin America and the Caribbean], and developed Asia, with EMEA likely to lag a North American spending recovery by several quarters. We expect ASPs to stabilize in the back‐half as well.”
As spending recovers, Modoff expects Cisco to benefit from sales of its Nexus line of data center switches, while its ASR edge router is taking market share from other switch vendors’ products at Verizon Communications (VZ) and AT&T (T), he believes. Modoff is looking for 26 cents per share in earnings for Q4 and 27 cents per share in fiscal Q1. That compares to 28 cents and 29 cents, respectively.
Modoff believes shares are worth $26 using a discounted cash flow valuation model with a discount rate of 11%.
Modoff’s note follows on positive remarks by RBC Capital earlier today and from Oppenheimer last Wednesday.
Cisco shares Monday are down 15 cents, or .7%, at $21.73.
