Cisco’s Transition to Recurring Revenue Model Progressing Slower Than Expected

Cisco’s (CSCO) transition to a more recurring revenue model is progressing slower than expected, even with the addition of the subscription-based Catalyst 9K campus switch, BMO said.

While the recurring revenue contribution from the Catalyst 9K is accelerating, it still remains small and the recent introduction of Arista’s campus switch portfolio could negatively impact the acceleration, the bank said.

“Our price target of $43 represents 15 times our full-year 2018 earnings per share estimate of $2.88, and assumes Cisco trades in line with the peer group. We rate Cisco shares as market perform,” BMO said.

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