Anyone can reinvent themselves as the saying goes. While Cisco has been doing just that, some think it's gotten a little too ambitious.
FBR Capital Markets analyst Scott Thompson downgraded the stock Thursday to underperform and slashed his price target to $17 from $22.
"We expect it may take longer than management expects to create organic software growth that is able to offset declining core routing and switching revenues," said Thompson in his report.
Cisco (CSCO) recently acknowledged that routers and switches still make up nearly half of its revenue but pointed to rapid growth from data center sales, wireless networking and online video services.
But Thompson points out that Cisco's plan to generate $12 billion of software-based revenue over the next three to five years seems aggressive. He calls it a "REAL stretch-goal" that will be hard to achieve without a major acquisition.
The Debbie Downer report pushed Cisco's stock down more than 4%, and gave StockTwits traders plenty to chew on.
Thanks for sharing. The thing that stood out for me was a reminder about how much cash Cisco has on its balance sheet.
Plus, the company has been buying back stock and issuing dividends. Those are all healthy signs.
Haha. Well, I, unsurprisingly, say to wait. Without a crystal ball, it's way too much of a guessing game.
As it evolves into other areas, Cisco faces stiff competition from the likes of IBM, Alcatel-Lucent (ALU) and Hitachi (HTHIY) to name a few. I can't imagine it's not looking at ways to knock one or more of them down a peg or two.
Say it ain't so. Are we heading for a death cross?
I like to end on a high note. As I noted higher up, Cisco does continue to pay a dividend and that usually sits pretty well with investors.
Maybe Cisco is being too aggressive...but maybe this is also just a temporary setback.
Pivotal Research Group analyst Brian Wieser was the first analyst to assign a "sell" rating on Facebook back in May, when the social media day giant made its big (botched) public debut.
Later that month, as Facebook's stock declined and fell below his then price target of $30 per share, Wieser changed his rating to "hold."
But given the recent slide in Facebook's shares ahead of the company's first earnings report Thursday MOREHibah Yousuf - Jul 26, 2012 11:21 AM ET
Another day, another downgrade in Euroland.
Egan-Jones lowered France's credit rating one notch to "BBB" from "A" on Thursday.
The ratings agency pointed to France's rising debt and slowing economic growth. It also warned that France is fond of subsidizing its banks, which could prove costly for the government.
In a subtle turn of phrase, Egan-Jones summed up the situation in France thusly: "Disastrous trend and the worst has yet to come."
While France MOREBen Rooney - Jun 14, 2012 3:39 PM ET
|China plans to hit US with tariffs following Trump trade sanctions|
|Toys 'R' Us founder Charles Lazarus dies|
|Dow plunges 724 points as trade war fears rock Wall Street|
|Asian stocks plummet on latest trade war fears|
|Billionaire CEO on a mission to save Toys 'R' Us|