Street expectations are high. Strength is company specific and not industry wide, meaning growth could moderate as the impact of a few factors subsides. Year-over-year earnings comparisons could turn more challenging in the second half. Peak operating margins imply limited upside to estimates. Premium valuation to the “mega cap” tech peer group.
Liani says the recent strength in the company’s results reflects product cycles, smart M&A, sales force increases and easy comparisons to a weak first half 2006. But he says trends could moderate in the second half as “the impact of some of Cisco’s smart moves begin to fade” and comparisons get tougher.
Tuesday, the stock was downgraded by Prudential and Bank of America.
Cisco shares were down $1.11 yesterday at $26.93.
CSCO 1-yr chart