Cisco Systems (CSCO) shares are up 14 cents, or 0.8%, at $18.13 after Mizuho Securities USA’s Joanna Makris this morning raised her rating on the stock to Buy from Neutral, and raised her price target to $21 from $17, writing that her “checks” show Cisco is “executing” better and there is a “modest rebound in public sector spending” underway.
Cisco reports fiscal Q1 results tomorrow, after the bell.
“This quarter represents a critical juncture, as we believe investors will be looking for assurance of improved operational performance in order to get more comfortable with a turnaround,” writes Makris.
“With Cisco having materially reset expectations, we believe the company has the potential to outperform as the macro backdrop stabilizes.”
While the Street is looking for Q1 results of $11.03 billion and 39 cents a share, Makris is actually below that, modeling $10.94 billion and 38 cents. She’s looking for “stable gross margin,” estimating 61.1%, down from 62.7% last quarter, and operating margin of 27.3%, up from 25.2% last quarter as the company maintains “open discipline” and “corporate efficiency.”
Makris estimate for the full year is in line with consensus at $45.3 billion and $1.67.
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