Cisco Systems, Inc. Could Unlock 50% Upside By Following eBay Inc Model

Cisco Systems, Inc. (NASDAQ: CSCO) should follow the lead of eBay Inc (NASDAQ: EBAY), according to RBC Capital Markets analyst Mark Sue, by unlocking shareholder value via spinoffs.

Sue feels the fast growing wireless, security and data center segments, which generate more $10 billion annually and are growing at 15 to 20 percent rate, could be separated, thus attracting both growth and value investors. This could potentially unlock a higher stock price.

Sue feels the value side of Cisco is worth $22 to $24 per share, while the growth side should be valued at $9 to $11 per share. Add in the $6 in cash that is presently on the balance sheet, and Sue estimates a spinoff could drive Cisco's value to $37 to $41 per share, or 47 percent to 63 percent higher than Wednesday's closing price of $25.03.