Right now I'm working on due diligence for the Hewlett Packard-Juniper Networks M&A deal (HPE/JNPR). Two comparables came up that I don't see mentioned enough: Cisco and Ubiquiti Networks.
First, Ubiquiti crushes it. The company produces steady revenue and healthy margins. If you talk to your local MSP/IT guy, they know how great Ubiquiti wifi products are. $9b stock. Also, I've noticed a big difference in management after Robert Pera took a larger stake. This is worth revisiting at a later point.
As for Cisco, I was surprised to see the stock still sliding downward. Today they announced a $1b A.I. fund at Cisco Live in Vegas ($200m already invested). It's neither a big deal nor a serious moneymaker, but Cisco is still a powerhouse stock.
Now the stock P/E ratio is reaching its historical average (~15x), the price is looking attractive. Even with the current challenges (Splunk, layoffs etc), I don't see the downtrend lasting for much longer. Maybe 15-20%. Cisco is an excellent M&A shop so I don't see them sitting still during this next cycle either.
Let me know what you think the downsides might be. Or what else I'm missing here.
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