Cisco: Berenberg waiting for a better entry point.
(CercleFinance.com) - Berenberg analysts maintain their "hold" rating on Cisco, with a target price of 33 dollars, after the network component maker reported slightly better-than-feared quarterly results.
In a research report, the broker still points out that the company's performance compared with very modest expectations following the previous "reset" following its third-quarter.
Berenberg notes that only the wireless and security divisions grew, and that this growth was not enough to offset the declines in both switching and next-generation network (NGN) routing.
"This quarter continues to support our concerns that the aforementioned business model transition will take time to implement and, meanwhile, the stock will remain range bound," the analysts add.
While Berenberg continues to believe Cisco's strategy to manage its maturity, moving away from its core switching and routing hardware business towards a software/subscription business model is sensible and will ultimately succeed, the brokerage firm thinks fourth-quarter results back concerns regarding the risks of such a transformation.
"Further, with the stock close to the high end of its 10-year trading range, we would await a better entry point," Berenberg concludes.
Copyright (c) 2017 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.
In a research report, the broker still points out that the company's performance compared with very modest expectations following the previous "reset" following its third-quarter.
Berenberg notes that only the wireless and security divisions grew, and that this growth was not enough to offset the declines in both switching and next-generation network (NGN) routing.
"This quarter continues to support our concerns that the aforementioned business model transition will take time to implement and, meanwhile, the stock will remain range bound," the analysts add.
While Berenberg continues to believe Cisco's strategy to manage its maturity, moving away from its core switching and routing hardware business towards a software/subscription business model is sensible and will ultimately succeed, the brokerage firm thinks fourth-quarter results back concerns regarding the risks of such a transformation.
"Further, with the stock close to the high end of its 10-year trading range, we would await a better entry point," Berenberg concludes.
Copyright (c) 2017 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.