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Cisco Fundamentals Are 'Very Strong': Bullish Tech Analysts

Technology bellwether Cisco is expected to announce fiscal-second quarter earnings results after the bell. Jason Ader, analyst at William Blair, and Simon Leopold, communications equipment analyst at Morgan Keegan, shared their analysis on the company.

“I’m pretty bullish—the fundamentals are great,” Leopold told CNBC.

But he added a caveat: "What makes me really nervous is the market psychology lately, which is something I’m struggling to understand.”

“Sales will be better than our estimate—towards the high end of guidance and I think the forecast is good—but is it enough to keep the market excited?”

Several tech companies such as Intel , which have reported better-than-expected earnings, have seen shares drop.

Leopold also expects Cisco’s earnings results to be good and has an “outperform” rating on the firm.

“We have a hard time making the trading call with what to do with the stock over the next 24 to 48 hours, but with a six-month view, we like it,” he said.

In the meantime, Ader said Cisco’s fundamentals are “very strong” and they are currently trading at multiples that are at 5-year lows.

“So if you have some patience, this stock is going to work and the fundamentals are better than they’ve been in a long time,” he said.

“You have large enterprise beginning to spend again—there’s a lot of catchup spending and strategic projects that IT departments have been unwilling to do because of [tight] budgets.”

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Cisco Competes With:

Oracle

Alcatel-Lucent

Hewlett-Packard

Juniper Networks

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Disclosures:

William Blair & Co has investment banking clients who own shares of Cisco. The firm is a market maker in the security of Cisco and may have a long or short position.

Leopold does not own any shares of Cisco.

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