Sorry if this has already been posted:
Argus Independent Equity Research, "Action Facts AM" for
Monday, January 11, 1999:
We are raising our 12-month target price on the CSCO shares
of Cisco Systems to $140 from $100, indicating a 30%
appreciation from current levels. Although the stock is at
premium valuation levels, we believe that Cisco, as a major
player in supplying the hardware for the development and
expansion of the Internet, will continue to benefit from
the explosive growth in Internet usage. We also believe
that the premium valuation is justified because we see the
company sustaining 30%-40% bottom line growth, even as
earnings growth for the S&P500 components are projected to
slow in 1999.
Already the dominant supplier of networking equipment in
the data world--according to Dataquest, it holds a 75%
share of the market for routers--Cisco is aggressively
going after customers in the telecom and cable service
provider sectors. It has already signed contracts with
several major telecom carriers to provide equipment that
allows voice, data and multimedia traffic to travel on
the same network. The company has confidently stated
that sales to telecom service providers is growing in
excess of 50% annually.
Cisco has also targeted the cable industry, which is
making major investments in its infrastructure so that
coaxial cables can carry voice and data as well as TV
signals. This week the company announced that it would
work with AT&T to develop a new cable broadband product
that will support integrated data, voice and video.
AT&T is moving to complete its merger with TCI and
integrate the latter's cable network to provide local
access. We see the cable industry as a huge potential
customer base for Cisco.
For now, we are maintaining our EPS estimates at $1.53
for the current fiscal 1999 and at $1.95 for fiscal
2000. We would not be surprised if the company's next
report of quarterly results, due in early February,
gives us reason to boost these estimates. The BUY-
rated CSCO shares closed Friday at $106-11/16, up
3-1/16. (DT) |
