Cisco Systems, Inc. (CSCO) stock experienced a significant surge in after-hours trading on Wednesday and continued its upward trend on Thursday after the company released upbeat fourth-quarter earnings results. The positive performance came amidst an exciting earnings season, with several companies reporting their financial performance.
Cisco reported fiscal fourth-quarter revenue of $13.64 billion, surpassing analyst consensus estimates of $13.537 billion. The company also reported adjusted earnings per share (EPS) of $0.87, exceeding analyst expectations of $0.85.
Several analysts provided their perspectives on Cisco’s earnings report and its implications for the company’s future:
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Needham
: Analyst Alex Henderson maintained a Hold rating on Cisco. He acknowledged that Cisco might be a safe haven for investors concerned about a recession but noted that it might not be the best option for those anticipating interest rate cuts. Henderson highlighted Cisco’s second consecutive quarter of positive order growth, despite a challenging environment. However, he pointed out that Cisco is facing competition in various sectors, including networking, security, and collaboration, from companies like Arista, Juniper, Extreme, Palo Alto, Zscaler, Crowdstrike, Zoom, and Microsoft. Henderson projected first-quarter revenue of $13.8 billion and EPS of $0.87.*
Oppenheimer
: Analyst Ittai Kidron maintained an Outperform rating on Cisco with a price target of $58. Kidron commended Cisco’s solid fourth quarter, exceeding estimates driven by reduced inventory pressures, accelerating organic revenue growth in security, and a rebound in order growth. He expressed optimism about opportunities in SaaS and cloud, particularly in security and collaboration, which are expected to drive recurring revenue. Kidron highlighted a favorable outlook for fiscal 2025, anticipating further improvement in enterprise order growth, significant opportunities in AI infrastructure, sustained momentum in security fueled by SASE and XDR, and a rebound in network security. Kidron projected first-quarter revenue of $13.7 billion and EPS of $0.87.*
Piper Sandler
: Analyst James E. Fish reiterated a Neutral rating with a price target of $52. Fish raised concerns about the sustainability of management’s belief in a return to normal demand conditions. He also acknowledged Cisco’s shift towards investments in AI, cloud, and security, which has impacted its product structure due to macroeconomic factors. Fish also noted the potential for cost savings and the impact of Splunk on Cisco’s operations. Despite the challenges, Fish increased the target multiple slightly to reflect positive AI order trends and better-than-expected fiscal 2025 guidance. He projected first-quarter revenue of $13.8 billion and EPS of $0.88.*
BofA Securities
: Analyst Tal Liani maintained a Buy rating on Cisco with a price target of $60. Liani believes that Cisco’s networking business will experience renewed growth as campus switching demand normalizes. He expects Ethernet-based AI deployments and new product launches to support the re-acceleration of Cisco’s security business. Liani also noted the positive impact of Splunk synergies on growth initiatives in security and observability. He highlighted Cisco’s shift towards recurring and subscription revenue, with 50% of revenue now recurring, as a positive factor for the stock. Liani highlighted Cisco’s underperformance relative to the NASDAQ and believes the company represents an attractive opportunity given its expected growth and margin improvements in fiscal 2025. His price target is based on an Enterprise Value to Free Cash Flow multiple of approximately 14.5x, reflecting Cisco’s stability and high dividend yield. Liani projected first-quarter revenue of $13.8 billion and EPS of $0.87.As of Thursday’s closing bell, CSCO shares were trading at $48.72, representing a 7.20% increase.
