Analyst Note| William Kerwin |
We maintain our $54 fair value estimate for wide-moat Cisco Systems after it reported fiscal first-quarter results modestly above our expectations. Cisco also raised its fiscal year top-line guidance slightly. We see strong fiscal 2023 performance for Cisco as a function of improving supply and demand dynamics: demand, while normalizing, remains strong for enterprise software and networking equipment, and supply is improving. We expect demand to stay healthy in fiscal 2023, and Cisco’s backlog, growing recurring revenue base, and remaining performance obligations give us confidence in fiscal 2023 results. We continue to view shares as undervalued.