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Fire Your Stock Analyst!: Analyzing Stocks on Your Own by Harry Domash

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Cisco Systems

Here’s another example, this time determining target prices for tech favorite, Cisco Systems. Cisco’s fiscal year ends in July, and when I did this analysis I had fiscal year data through July 2001. I analyzed Cisco’s target price for a shorter timeframe, as of its fiscal year ending July 2003.

(1) Forecast Target Year Sales

The tech industry was in a tailspin when I did the analysis, and projecting sales growth in a recovery was a guessing game. Given the circumstances, I decided that Cisco’s sales history was a better prognosticator of its future sales growth than analysts’ forecasts. So I ignored consensus sales forecasts when I computed Cisco’s 2003 fiscal year’s sales. Table 6-5 shows MSN Money’s 10-year sales data for Cisco. ...

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