Light Reading
Wunderlich cuts Cisco, Jefferies isn't so pessimistic, while Raymond James sticks with an 'Outperform' rating, as financial analysts try to glean the company's prospects in a more virtualized networking world.

Financial Analysts Split on Cisco's Outlook

Dan Jones
4/8/2014
50%
50%

Some financial analysts are split on Cisco's future prospects in a more software-defined and virtualized networking world.

Raymond James Financial Inc. (NYSE: RJF) continues to hold Cisco at an "Outperform" rating, setting the share target price at $26.00. "We believe Cisco's position is better than appreciated," writes analyst Simon Leopold in a report.

"We think investors struggle to determine its ability to restore growth," Leopold writes. "We perceive material Fear, Uncertainty and Doubt (FUD) that has weighed on its largest reporting segment, Switching, and suspect confusion and concern have restrained the stock."

He argues that an improving US economy is typically a good indicator for Cisco Systems Inc. (Nasdaq: CSCO) "Improving employment and economic growth bode positively for Cisco's growth," Leopold states.

He also sees Cisco's product refresh, with products such as the Nexus 9000 data center switching series as positive, arguing that customers won't be using "white box" systems for crucial infrastructure like data centers. "We believe that most enterprises either lack the sophistication and resources to implement a white box strategy, or they view their datacenters as mission critical and complex and want to reduce the risk when implementing the 'white box' architecture," Leopold notes.

Centrist view
George Notter at Jefferies & Company Inc. also believes that many Wall Street views of Cisco "are a bit too pessimistic right now."

In a research note sent to clients, Notter notes that SDN is a way off, and it's early days for white box and Linux-based OS strategies. In addition, he believes Cisco's ACI plan, including the OpFlex alternative to OpenFlow, stacks up well against the SDN strategies of VMware and others. (See Goin' South: Cisco Offers 'OpFlex' as Alternative to OpenFlow and Cisco's ACI Gets Physical With SDN.)

"As the incumbent vendor in the Ethernet switching space, Cisco enjoys the benefit of doubt from their customers. Moreover, we think their ACI strategy will be enough to keep customers in the fold," he adds.

Notter has a hold rating on Cisco's stock, with a price target of $22.00.

The downer
A different analyst, however, sees SDN and NFV as a potential competitive threat for Cisco in the future and has revised its outlook accordingly. (See Goin' South: Cisco Offers 'OpFlex' as Alternative to OpenFlow and Cisco CEO: It's Early Days for Virtualization.)

Wunderlich Securities Inc. has downgraded Cisco on concerns about its future in SDN and NFV. The firm has cut its outlook from "Buy" to "Hold" and lowered the share price target from $25.00 to $24.00.

"We came away from industry interviews in recent weeks with the view that the market has less interest in the Cisco product suite than in past transitions," writes analyst Matthew S. Robison in a report quoted by Benzinga. "We see the range of alternatives for network automation/software defined networking (SDN), network function virtualization (NFV), and cloud services as dilutive to the Cisco installed base upgrade opportunity."

Cisco's stock is currently at $22.85, the same price at which it closed Monday.

— Dan Jones, Mobile Editor, Light Reading

(2)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
gconnery
50%
50%
gconnery,
User Rank: Light Sabre
4/8/2014 | 11:33:02 PM
Fighting anti-US equipment sentiment due to NSA surveillance too
I don't see the upside.  The stock is volatile yet has been trading between 20 and 33 for 13 years now.  Sounds familiar right?  That's why Balmer is out at Microsoft now.  I wouldn't put money into the stock unless there was somebody new at the helm.  I don't see it.
sam masud
50%
50%
sam masud,
User Rank: Light Sabre
4/8/2014 | 1:25:59 PM
Mostly uphill for Cisco
While the SDN ecosystem is a ways from maturing, I don't see how disaggregation of the network (separation of control/forwarding) taken together with bare metal switches plays to the way how Cisco has come to dominate the infrastructure. Can Cisco change its approach and still be successful? That's something it will find very hard to do.
Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Documentaries
Optical Is Hot in 2015

1|23|15   |   01:56   |   (2) comments


Optical comms technology underpins the whole communications sector and there are some really hot trends set for 2015.
LRTV Custom TV
Policy Control in the Fast Lane

1|22|15   |   2:57   |   (0) comments


What's making policy control strategic in 2015 and beyond? Amdocs talks with Graham Finnie from Heavy Reading about some of the key factors driving change in the data services landscape. Find out what his policy management research reveals about the road ahead for policy control.
LRTV Documentaries
Highlights From the 2020 Vision Executive Summit

1|21|15   |   4:33   |   (2) comments


In December 2014, Light Reading brought together telecom executives in Reykjavik, Iceland to discuss their vision for high-capacity networks through the end of the decade. The intimate, interactive meeting was set against the backdrop of Iceland's spectacular natural beauty. As one of the event's founding sponsors, Cisco's Doug Webster shared his company's ...
LRTV Huawei Video Resource Center
Huawei Pay-TV Partner Harmonic, Helping Carriers Accelerate 4K Video Deployment with Huawei

1|20|15   |   5:42   |   (1) comment


At IBC, Peter Alexander, Senior Vice President & CMO at Harmonic, speaks about the growing interest in pay-TV service and its branching into multiple devices.
LRTV Huawei Video Resource Center
Sony Marketing Director Olivier Bovis Discusses the Outlook for 4K and Cooperation With Huawei at IBC 2014

1|20|15   |   6:50   |   (0) comments


At IBC, Olivier Bovis, Marketing Director of Sony, speaks about the coming of the 4K era.
LRTV Huawei Video Resource Center
Huawei Pay-TV Partner Envivio, Helping Carriers Accelerate 4K Video Deployment

1|20|15   |   2:57   |   (0) comments


At IBC, Olivier Bovis, Marketing Director of Sony, speaks about the coming of the 4K era.
LRTV Huawei Video Resource Center
Pay-TV's Networked Future

1|20|15   |   6:29   |   (0) comments


At IBC, Jeff Heynen, Principal Analyst at Infonetics, speaks about the future of the pay-TV industry and its transition.
LRTV Huawei Video Resource Center
Jeff Heynen: Distributed Access Will Help MSOs Compete in the Future

1|20|15   |   2:26   |   (0) comments


At IBC, Jeff Heynen, Principal Analyst at Infonetics, speaks about moving to distributed access and the future trend of cable business.
LRTV Interviews
Cisco Talks Transformation

1|20|15   |   13:02   |   (0) comments


In December 2014, Steve Saunders sat down with Cisco VP of Products & Solutions Marketing Doug Webster at Light Reading's 2020 Vision executive summit in Reykjavik, Iceland. They spoke about Cisco's approach to network virtualization as well as how service providers can begin to monetize high-capacity networks through the end of the decade.
LRTV Interviews
Bob Wilson, Arsenal Legend: The Light Reading Interview

1|16|15   |   35:36   |   (3) comments


Arsenal goalkeeping legend Bob Wilson was Light Reading's guest interviewee at the 2020 Vision Executive Summit in December. See what the former soccer star and sports broadcaster had to say when he took to the stage in Iceland.
LRTV Custom TV
What MEF Third Network Initiative Means for SDN & NFV

1|14|15   |   6:13   |   (0) comments


Vitesse Semiconductor CTO Martin Nuss discusses the importance of the MEF Third Network initiative and why it's good news for SDN/NFV industry initiatives.
LRTV Huawei Video Resource Center
Frank Miller: Distributed Solutions are the Best Build for the Future - Part II

1|9|15   |   2:46   |   (0) comments


At SCTE, Frank Miller, Global CTO of MSO at Huawei, speaks about Cable 2.0 and its innovative future.
Upcoming Live Events
February 5, 2015, Washington, DC
February 19, 2015, The Fairmont San Jose, San Jose, CA
March 17, 2015, The Cable Center, Denver, CO
April 14, 2015, The Westin Times Square, New York City, NY
May 12, 2015, Grand Hyatt, Denver, CO
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 9-10, 2015, Chicago, IL
September 9-10, 2015, The Westin Galleria Dallas, Dallas, TX
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
November 11-12, 2015, The Westin Peachtree Plaza, Atlanta, GA
December 1, 2015, The Westin Times Square, New York City
December 2-3, 2015, The Westin Times Square, New York City
Infographics
Hot Topics
Cuomo Unveils Broadband Aid Program
Alan Breznick, Cable/Video Practice Leader, 1/19/2015
FiOS Picks Up Pace Again
Alan Breznick, Cable/Video Practice Leader, 1/22/2015
BlackBerry Wants Net Neutrality Protection -- That's Just Sad
Mitch Wagner, West Coast Bureau Chief, Light Reading, 1/22/2015
Indiana Carrier Takes Fiber to the Farm
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 1/22/2015
Verizon Ready for Google MVNO Challenge
Dan Jones, Mobile Editor, 1/22/2015
Like Us on Facebook
Twitter Feed
Webinar Archive