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Cisco shares scale 18-year highs on return of revenue growth


(Reuters) - Shares in Inc were set to open at their highest in 18 years on Thursday after quarterly earnings suggested a years-long effort to turn the around was finally bearing fruit.

Shares of the world's biggest of vital data connectors like routers and switches were up 7.7 percent at $45.53 in premarket trading. They have risen 30 percent in the past 12 months.

At least 12 brokerages raised their price targets on the stock, with the highest now analysts' $55 a share.

The company's quarterly revenue rose 2.7 percent to $11.9 billion, the first rise in more than two years. It also forecast an upbeat current quarter.

"Cisco's print and the guidance are important milestones - they may change investor perceptions about the company as a 'melting ice cube'," Jefferies said.

Cisco has been trying to reimagine itself as a company with a focus on subscriptions after struggling with waning demand in its traditional of selling the routers and switches which direct

"(A) return to growth (is) no longer on the horizon; it has arrived - fuelled by broad-based improvement across product, customer and regional markets and in both macro and company-specific execution," said.

The company has benefited from the growth in smartphones, tablets and Internet of Things gadgets, the shift into that demand more connections between servers, and the rise of security threats.

Cisco started its transition toward a subscription and nearly three years ago when long-time company executive took over as It now gets a third of its revenue from recurring offers and more than half of revenue from subscriptions.

Out of 29 analysts covering the stock, 20 have a "buy" or higher rating and nine have a "hold." No one rates the stock a "sell."

"We have consistently argued that Cisco is a 'rerating' story with an accelerating mix shift to stickier and and subscriptions portfolio," said.

At Wednesday's close, Cisco's market value was $208.08 billion, still just a third of the $619 billion it was worth at the peak of the dotcom boom in 2000.

(Reporting by and in Bengaluru; editing by Patrick Graham)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, February 15 2018. 19:24 IST