Trefis members have created forecasts for two key drivers of Cisco’s (CSCO) stock over the last week: (1) Digital TV Box Market and (2) Digital TV Boxes Gross Profit Margin. Their forecasts suggest that Digital TV Box Market trends higher than the Trefis forecast, while Digital TV Boxes Gross Profit Margin trends lower. These projections suggest a combined upside of only 1% for Cisco’s stock.
Digital TV boxes constitute only around 6% of the $24 Trefis price estimate for Cisco’s stock. In comparison, Network Switches and Network Services account for 26% and 17%, respectively. A higher than expected increase in the size of the Digital TV Box Market would also benefit Cisco’s single largest competitor, Motorola (MOT)
Below are charts showing recent estimates created by Trefis members for the two drivers: (1) Digital TV Box Market and (2) Digital TV Boxes Gross Profit Margin.
1. Digital TV Box Market
The average of forecasts for Digital TV Box Market created by Trefis members indicated a projected increase from about 151 million in 2010 to about 225 million by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from from about 141 million in 2010 to 188 million by the end of the Trefis forecast period. The member estimates imply an upside of 1% to the Trefis price estimate for Cisco’s stock. In the past, Digital TV Box Market has increased from 72 million in 2004 to about 134 million in 2009.
You can drag the forecast trend-line above to express your own view, and see the sensitivity of Cisco’s stock to Digital TV Box Market.
2. Digital TV Boxes Gross Profit Margin
The average of forecasts for Digital TV Boxes Gross Profit Margin created by Trefis members indicated a projected decrease from 53.4% in 2010 to 52% by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from 52.5% in 2010 to 54% by the end of the Trefis forecast period. The member estimates imply very little downside to the Trefis price estimate for Cisco’s stock. In the past, Digital TV Boxes Gross Profit Margin has decreased from 62% in 2003 to 52% in 2009.
You can drag the forecast trend-line above to express your own view, and see the sensitivity of Cisco’s stock to Digital TV Boxes Gross Profit Margin.
