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economic environment

“Cisco’s F2Q earnings and F3Q outlook can be broadly characterized as modestly better than expected, although what makes it stand out is the resilience of the performance despite consistent concerns relative to macro growth; marking a significant change for a stock that was once considered a bellwether for the industry and still trades at a discount to the overall market multiple,” Chatterjee said, adding that growth momentum in applications and security sales underscored the success of Cisco acquisition strategy such as the company’s acquisition of Duo Security last year.

FBN Securities analyst Shebly Seyrafi said that the company’s latest numbers showed “more good than bad,” given strong indications in switching, wireless, applications, and security. These outweigh his concerns about the decline in Cisco’s routing business and a deceleration in some key emerging markets.

Seyrafi raised his target price to $60 from $55 and reiterated his outperform rating on the shares.

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William Blair’s Jason Ader expects Cisco’s “broad-based strength” to persist “with little impact from macro events.” He also cheered the company’s acquisition strategy, following the purchases of Luxtera and Singularity Networks during the quarter.

“We like the optionality of Cisco being able to use its cash war chest to bolster its growth through strategic M&A,” wrote Ader, who has an outperform rating on the stock.

MKM Partners analyst Michael Genovese, who has a neutral rating and raised his “fair value estimate” to $54 from $51, said he was surprised by Cisco’s 18% growth in public sector orders even with the U.S. government shutdown in December and January, but he doesn’t think that momentum is sustainable.

“In addition, the macro environment has been very cooperative recently, and could cool a bit going forward, Genovese said.