Cisco: Berenberg maintains 'hold' rating.
(CercleFinance.com) - Germany's Berenberg maintains its "hold" rating on Cisco with a target price of 33 dollars after the network gear maker yesterday announced the acquisition of collaboration software vendor BroadSoft for 1.
9 billion dollars in cash.
The broker says the transaction implies multiples of 24x P/E and 5x EV/sales, which seem "reasonable" for a business that delivers around 8% annual growth in revenues.
Berenberg also thinks the deal makes strategic sense as it will expand Cisco's collaboration division (9% of revenues), one of the company's growth segments.
Furthermore, the move is in line with the company's strategy of shifting its business from hardware to software, the broker adds.
In conclusion, Berenberg thinks the deal is positive, although not significant, as BroadSoft's 2017 revenue represent under 1% of Cisco's revenues, which means that the firm will not materially affect business in the near term.
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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.
9 billion dollars in cash.
The broker says the transaction implies multiples of 24x P/E and 5x EV/sales, which seem "reasonable" for a business that delivers around 8% annual growth in revenues.
Berenberg also thinks the deal makes strategic sense as it will expand Cisco's collaboration division (9% of revenues), one of the company's growth segments.
Furthermore, the move is in line with the company's strategy of shifting its business from hardware to software, the broker adds.
In conclusion, Berenberg thinks the deal is positive, although not significant, as BroadSoft's 2017 revenue represent under 1% of Cisco's revenues, which means that the firm will not materially affect business in the near term.
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.