Cisco Systems, Inc. (NASDAQ: CSCO) mediocre earnings report isn't enough for some analysts to throw in the towel. Cowen's Paul Silverstein maintains an Outperform rating on Cisco's stock with an unchanged $39 price target, even though the company's fiscal fourth-quarter guidance was "weak."

Weak Growth But Impressive Margins

Silverstein noted Cisco's fiscal third-quarter report showed "disappointing" revenue growth, but at the same time, the company's margin structure remains "impressive." In fact, the two factors cancel each other out and create a scenario where Cisco's earnings per share guidance is in line with what the Street is looking for.

Looking forward, the key debate among analysts and investors will focus on Cisco's guidance being a result of an ongoing shift to a software-centric recurring model or macroeconomic and end-demand related.

Silverstein argued that the Cisco's shift in operating model and macroeconomic weakness in several markets is indeed playing a "significant role," but this is far from the whole story.

Moreover, the company's shift in model does create greater visibility into future revenue as evidenced by the "significant" growth in deferred revenue in the quarter.

But at the end of the day, the analyst cited Cisco's stock valuation, which now boasts a "highly favorable" risk to reward profile, especially when factoring in the prospect of new tax laws allowing for a more favorable cash repatriation.

View more earnings on CSCO

Bottom line, the slowdown in Cisco's growth presents a challenging scenario for the company but management could see success in transitioning to a larger and more strategic IT solutions supplier.

At time of publication, Cisco was down 7.55 percent at $31.26.

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