On Thursday, Piper Sandler adjusted its outlook on Cisco Systems Inc. (NASDAQ:CSCO), raising the price target to $52 from $51, while maintaining a Neutral rating on the stock. The adjustment came in response to Cisco's fiscal third-quarter results, which aligned with expectations and indicated a positive shift in demand.
The company's recent performance demonstrated an organic quarter and guidance that met projections. Additionally, lead metrics surpassed the expectations of the investment community, signaling a stronger existing demand.
Despite these positive indicators, the analyst from Piper Sandler noted that the organic lead metrics, excluding product orders, indicated potential areas of weakness within Cisco's core Networking, Security, and Collaboration segments.
Looking ahead, discussions are expected to intensify in the weeks leading up to Cisco's analyst day on June 4th. Key topics of debate are likely to include the company's ability to achieve normalized growth in fiscal year 2025, the implications of an operating expense increase that could significantly impact earnings per share, and the integration of Splunk (NASDAQ:SPLK).
Other considerations include the changing competitive landscape, the trajectory of the organic Security business, and the sustainability of growth rates and margins beyond fiscal year 2025.
The Piper Sandler analyst reiterated a Neutral stance on Cisco shares, indicating a cautious approach until the analyst day provides further clarity. The slight increase in the price target to $52 reflects a modestly optimistic view of the company's improving demand conditions, albeit tempered by the concerns mentioned.
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