Cisco earnings: Duo acquisition is nice, but what have you done for us lately?

Cisco Systems Inc. will wrap up its fiscal year with an earnings report that could have investors focusing on the future instead of the results.

Cisco CSCO, +0.00%  is scheduled to report fiscal fourth-quarter earnings on Wednesday after the closing bell, but those earnings aren’t what investors have focused on lately. Drawing the spotlight away was Cisco’s recent announcement that it is acquiring Duo Security for $2.35 billion, a move that drew accolades from many analysts

Cowen analyst Paul Silverstein, who has an outperform rating and a $51 price target said in a note that “Duo should further improve Cisco’s security value proposition, shift to intent-based networking and transition to a more multi-cloud-centric, annual subscription, recurring revenue model.”

Piper Jaffray analyst James Fish, who has an overweight rating on Cisco and a $50 price target, noted: “We believe network security providers need to own the identity space, as this is the next ‘platform’ in security.”

Any effects on the security business won’t be felt until next year, however, so Cisco’s forecast for the current fiscal year will likely be parsed more than the numbers it produced in the fourth quarter, when European sales may have come in weak. Oppenheimer analyst Ittai Kidron, who has an outperform rating and a $50 price target on Cisco, expects the July-ending quarter to be “a transitional bump in the road.”

Read: Amazon denies it will challenge Cisco with switch sales

“Based on our U.S./European channel checks (30 interviews), we expect Cisco to report revenue in line with to potentially slightly below the July-quarter consensus,” Kidron said in a note, citing soft European demand.

“Our view takes into account recent weak service provider Capex trends, background noise (Europe, tariffs, GDPR, etc.), and our enterprise checks which suggest possible softness,” Kidron said. “That said, we’re more

Read More Here...

Bookmark the permalink.