Cisco Earnings: Valuation Down to $53 From $56 on Lowered Outlook; Still Like Long-Term Opportunity

We trimmed our fair value estimate for wide-moat Cisco Systems to $53 per share, from $56 after the firm reported impressive fiscal first-quarter results but provided poor guidance for the rest of the fiscal year. Cisco’s January-quarter guidance implies a 13% sequential sales decline, and management lowered their outlook for fiscal 2024 sales by roughly 5%. Management attributed the lowered expectations to large enterprises working to implement Cisco equipment previously delivered before resuming orders. We now see fiscal 2024 as more of a correction year. Tremendous fiscal 2023 results were driven by backlog reductions buoying sales above end demand that looks like it was weaker than we’d previously believed.