Update 01/08/2020: from SA today and I totally agree. While I am NOT planning on reducing my CSCO position, I surely will use 2020 to increase if opportunity arises. The CSCO goodness (assuming economy and 5G roll out does not materially change to negative), will surface in 2021 – quote:
- Cisco Systems (CSCO -1%) slips to its lowest level so far this year after BofA Merrill Lynch downgrades shares to Neutral from Buy with a $52 price target, trimmed from $56, citing a lack of expected catalysts in 2020.
- “We see several headwinds that could continue to weigh on upcoming results,” BAML’s Tal Liani writes. “Challenges include 2-3 quarters of difficult [comparisons], slower potential growth for campus switching, secular pressure on routing and reduced share repurchase activity.”
- Key risks according to Liani include the Catalyst 9K campus switching cycle plateauing, ASC 606 and M&A tailwinds in FY 2019 hurting comps, and exceptional performance in Security and Applications potentially decelerating.
- CSCO’s average Sell Side Rating and Seeking Alpha Authors’ Rating are both Bullish, while its Quant Rating is Neutral.
Older post below
A SA author beat me to the punch as priorities kept me from posting something intelligent. I commented on the author and will be spending time between now and EOY fleshing out this thesis (not specific to CSCO but it will be included).
I agree w/ timelines, and I see 2021 as the beginning of a revenue upward cycle being driven by enterprise upgrades to meet 5G data and M2M usage demands. Between now and then, the macro winds will blow … a great buying opp in 2020 may surface, and if that happens, I will increase my % of CSCO to 7-10% from current 4.5% (long time kernel holding – cost basis <$15)
This 3 phase 5G implementation / roll out is the heart of the thesis mentioned.