Shares of Cisco Systems Inc. CSCO were declining 0.9% in Wednesday morning trading after BofA Global Research analyst Tal Liani lowered his rating on the networking stock to neutral from buy. Liani wrote that consensus expectations bake in a “soft landing” for Cisco’s product-revenue growth but also “lead to FY24/FY25 product revenues that are much higher than historical levels.” He notes that Cisco typically has delivered $36 billion to $39 billion in product revenue since fiscal 2012, while for fiscal 2023, consensus expectations call for about $43 billion on the metric, or roughly $37 billion when excluding backlog contributions. “Backlog is expected to return to its historical levels by 2H24, yet despite lack of further backlog support, the Street is maintaining high estimates for FY24/FY25 at $44.2bn and $45.3bn, respectively, which assumes a sharp order recovery or points to risk of disappointment in the magnitude of ~7%-14%,” Liani wrote in his note to clients. He maintained a $56 price objective on Cisco shares.
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