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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 71.08

+0.1%

Nov 7 9:30 AM EST

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To: The Phoenix who wrote (39256)	8/10/2000 11:08:45 AM
From: The Phoenix	Read Replies (4) of 77397

More random musings... Cisco earned .53 cents this year - 47% gain over last year. This yeilds a backward PE of 125. Of course in high earnings growth markets backward PE doesn't mean much. Next years' consensus estimate is 72 (or 76 is you believe that Cisco will beat by a penny each quarter). These numbers put earnings growth in the 36%-43% range. If we take the middle of the road - say .74 then Cisco's forward PE - based on consensus would be 89. Yes it may seem high. Let's look at some data points. Bearish target discussed here of $35. Forward 01 PE would be 47 - right in line with earnings growth but behind projected 2002 growth and ignores industry growth and Cisco execution. Bearish target of $50/share. Forward 01 PE would be 56. Premium for this year but below targets for 2002. Looks like a reasonable floor price and a buy IMO. I don't think we will break through this support. Current resistance at $60/share. Forward 01 PE would be 81. Premium price and takes into account forward earnings growth and expectations in market growth and enterprise positioning. However this based upon consensus numbers which could be raised....and are below 2000 earnings growth. $60 is not a "priced to perfection" number and seems like a reasonable support level. Bullish price of $75/share. Forward PE would be 100. High but still well off YR 2000 levels. Possible 2001 earnings of 80 cents (in line with 2000 earnings growth of 47%) and future earnings growth expectations could make this possible. Priced to perfection? Perhaps? Again... just random thoughts for the thread... OG

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