Entspannung im Telekomequipementbereich?
UBS Warburg puts sizzle in Cisco
Analyst comfortable with Q4 prospects
By Susan Lerner, CBS.MarketWatch.com
Last Update: 10:10 AM ET July 23, 2001
NEW YORK (CBS.MW) - It's not often you hear the word "calm" nowadays when referring to a tech company as it prepares to close out a quarter. But that's Nikos Theodosopoulos' take on Cisco with only two weeks to go in its fourth quarter.
"Channel checks indicate Cisco is not 'scrambling' to make the current July quarter in the last two weeks and there is a sense of calm at the company," said the UBS Warburg analyst as he boosted his rating on the stock to "buy" from "hold."
Theodosopoulos also raised his long-term price target for the shares to $24 from $20. And following the upgrade, Warburg added Cisco to the firm's "Highlighted Stocks" list.
The news lifted Cisco shares (CSCO: news, chart, profile) 77 cents, or 4.3 percent, to $18.76 in early trading.
Theodosopoulos said checks with distributors and salespeople indicate that there has been no big sales push during the final two weeks of the quarter and he believes gross margin and expense control measures are on track.
All these factors lead Theodosopoulos to believe Cisco will achieve consensus estimates and perhaps even build some backlog going into the October quarter. Analysts on average are expecting Cisco to report earnings per share of 2 cents and a 10 percent decline in revenue.
"Since we downgraded the sector several months ago given our concerns on telecom capex, Cisco's financial flexibility relative to other large telecom equipment companies has improved dramatically," said Theodosopoulos, who noted that the company has about $17 billion in cash and investments and no debt, while every other large diversified telecom equipment company is in a net debt position.
