Cisco shares rose +6.6% even as its largest area of business - infrastructure platforms was down more than 16% year on year in Q1. An upbeat presentation impressed analysts after the numbers came out.
Analysts appreciated management's more upbeat tone and a recovery in the commercial and public sector, and were also generally positive on a new chief financial officer as the company continues transitioning to more recurring revenues.
Piper Sandler saw a "low-quality beat" and is Neutral on the stock, but bumped its price target to $45 from $44. It saw positives in the strong guidance and positive margin impact from restructuring, along with a CFO hire who has the experience the company needs. But it noted the miss in product with "uninspiring" lead metrics, and says Cisco needs more drastic changes to its subscription model.
New Street Research upgraded to Buy, noting the strong guidance indicates a trough, and the beginning of a recovery in IT spending. Credit Suisse forecasts better commercial and public sector orders. Despite this beat, they're a bit more reserved on medium to long term due to durability of revenues and headwinds (COVID-19, work-from-home, and increasing competition) as it moves more toward recurring revenues.
