Cisco has lost 30% of its stock value this year. Each time after quarterly earnings announcements and conference calls the stock has been severely punished. Has this punishment gone too far? Stern Agee thinks so.
Sterne Agee, a 100 year old investment group, says a “sum of the parts” analysis values CSCO at $27-$28 a share, well above it current level of $16.70 that’s a 67% increase.
SA values the following parts:
New Products $5/share
Cash $4/share (Credit Suisse says they have $4.81/share in cash)
Better buy Cisco (CSCO -0.4%) at current “depressed levels” than wait to see the actual improvement, Sterne Agee says, expressing faith that it will “make the right moves” to restore investor confidence. A sum-of-the-parts analysis suggests the stock is worth $27-$28. Latest restructuring speculation: Cisco plans to sell its Linksys consumer router business and possibly its WebEx brand.
Credit Suisse maintains a $26 per share price on the stock.
CS analysts had this to say on May 12, “we maintain our Outperform rating and see shares as still attractive over the longer-term given historical low valuation of less than 10x forward estimates ex-cash. we maintain our Outperform rating and see shares as still attractive over the longer-term given historical low valuation of less than 10x forward estimates ex-cash.
During the quarter, Cisco’s fully diluted share-count decreased by (50) million shares to 5.54 billion shares, driven by the company’s repurchase of 54 million shares of its common stock at an average price of $18.52 per share for an aggregate purchase price of approximately $1 billion. Cisco has $11.7 billion remaining in its current stock repurchase plan.
However there is no rush to purchase at this time. Several analysts said it will take John Chambers, Cisco’s President, several quarters to reorganize the company. So I’m holding for upside surprises and may add to my position if the stock drops to $16.