Fortnightly Publication Highlighting Latest Insights From IRF Providers
Company Research
Technology
Could the stock soar over 100%? KCR argues that CSCO isn’t just cheap vs. AI peers - it is cheap relative to the broader market, trading at roughly the same multiple as Kimberly-Clark despite far stronger growth. Networking product orders have risen 10% Y/Y for 4 consecutive quarters, suggesting investor concerns about a slowdown are unwarranted. Meanwhile, the company’s rapidly growing exposure to AI infrastructure products and shift towards subscription-based revenue both support multiple expansion. CSCO trades at one-third of Arista Networks’ P/E multiple and one-quarter of its EV-to-revenue ratio - even a modest narrowing of the valuation gap would translate into substantial gains for CSCO shares. Finally, a ~5% FCF yield is far too high for a company of CSCO’s quality.
Edition: 222
- 17 October, 2025
Tech: AI innovations, market disruptions and emerging opportunities
Technology
The themes SPR will be focusing on in 2025 include 1) AI related: (a) AI applications move to the edge - benefitting the likes of Ciena, Arista and Crown Castle. (b) AI networking transition to ethernet vs. InfiniBand, benefitting Arista, Cisco, Juniper and Extreme. (c) AI use cases that are delivering strong ROI vs. others that are not, despite strong sales efforts by vendors - impacting renewals for Salesforce, ServiceNow, and others. 2) In cyber security, areas of growing priority include SOC automation and Next Generation SIEM. 3) More vendors bypass distribution and sell via the CSP marketplace or direct, negatively impacting large distributors. 4) BEAD - despite delays, this program will drive meaningful revenue. 5) Vendors benefitting from the rapid growth in DevOps / DevSecOp.
Edition: 202
- 10 January, 2025
IT Spending: Sentiment weaker than last quarter
Technology
SPR’s latest channel checks reveal disappointment that the second half pick up that many expected has not materialised. Stock specific feedback includes: ServiceNow - all very positive - probably the strongest indications for any vendor. Crowdstrike channels and end users see the vendor moving quickly past its recent crash. SPR has picked up mixed feedback re. Fortinet’s recent security breach and whether it negatively impacted Sept Qtr end deal flow. Outside of security, the vendors seeing an increase in positive comments include IBM, Oracle, Microsoft, Arista and Juniper/Mist. It has been easy to pick up comments on share loss by Cisco.
Edition: 197
- 18 October, 2024
Communications Equipment: Earnings quality review
Communications
BTN’s Earnings Quality Watch industry reports provide readers with a quick way to identify the companies that are the most and least exposed to the risk of reporting disappointing results or guidance due to recent results being distorted by unrealistic, accounting-related benefits. Looking at the table above, only Ubiquiti received a ‘Pass’ rating in the Communications Equipment industry, while BTN sees meaningful risk that Arista Networks and Cisco Systems will disappoint on earnings in the next 2 quarters.
Edition: 190
- 12 July, 2024
Giant layoffs loom as Tech firms face customer budget freezes
Blueshift’s IT sector sources are pointing at Oracle’s plan to cut c.30k jobs as the crack in the dam that is going to trigger a resizing of workforces across all of tech - as one recruitment executive said, “They have literally been making up jobs for the past several years to beat each other to talent. It had nothing to do with rightsizing. It was a competition to impress investors.” Sources were unanimous that earnings forecasts for the rest of the year across most vendors in all verticals of DIY enterprise networking are going to be poor. Companies covered include Arista Networks, Cisco, CrowdStrike, Dell, Fortinet, IBM, Palo Alto and Zscaler.
Edition: 140
- 22 July, 2022
Companies with dangerous inventory levels
"FISH" - First In, Still Here. Two Rivers deconstruct their Earnings Quality model to focus solely on one aspect of poor earnings quality: significant inventory slowdowns. This looks at 1) The materiality of inventory levels to the business. 2) The trend in turnover. 3) The magnitude of the slowdown. As the odds of recession rise, companies caught with excess inventory will find themselves forced to offer price concessions, leading to sales and margin declines, and to earnings disappointments. Highlighted names include Alcoa, Amazon, Arista Networks, Beacon Roofing, Beyond Meat, First Solar, LGI Homes and Walmart.
Edition: 139
- 08 July, 2022
Technology
Inflection Point Research, LLC
A Cloudy future is a good one - ANET is in a great competitive position, with tailwinds across all its end markets and product lines. Michael Fox points to the ongoing and accelerating networking upgrade cycles at Microsoft and Meta Platforms, in addition to greenfield business ramping at Alphabet as reasons to be bullish. Add to that share gains in an increasing TAM for enterprise / campus and you get the best networking growth story for the next two years.
Edition: 131
- 18 March, 2022
Detecting Meaningful Language Changes in Security Filings…
Analyses of text changes in 10Qs/10Ks offer unique insights into management intentions and company internal projects. Recent noteworthy changes include:
Arista Networks (ANET): Order cancellation concerns and customer price sensitivities.
Endo International (ENDP): Actively planning / preparing for a Chapter 11 Bankruptcy filing?
GoDaddy (GDDY): Uncertainty on customer demand and growth; plus FTC / CID issues re. regarding data privacy / security practices.
Herbalife (HLF): Unwilling or unable to increase prices due to supply chain issues / higher costs.
Edition: 123
- 12 November, 2021
Arista (ANET), Juniper (JNPR) & Cisco (CSCO)
Technology
While checks on product and sales execution have been steadily improving for JNPR and ANET, they are declining for CSCO. Sales Pulse believe that investors who are looking for any improvement for CSCO are going to be disappointed. While ANET's stronger performance may be expected, JNPR's appears less well known.
Edition: 115
- 23 July, 2021