Wells Fargo analyst Aaron Rakers has maintained their neutral stance on CSCO stock, giving a Hold rating today.
Aaron Rakers has given his Hold rating due to a combination of factors involving Cisco Systems’ performance and outlook. On the positive side, Cisco has demonstrated encouraging signs, such as their anticipated mid-single-digit percentage organic growth for FY25, excluding certain acquisitions, and a significant potential for AI orders in the same fiscal year. With a forecast for approximately $1 billion in AI orders, there is a clear growth opportunity that lends credibility to Cisco’s strategic direction. Additionally, Cisco’s guidance outperformed the Street estimates for the fourth fiscal quarter of 2024, suggesting a robust near-term performance.
However, despite these positive indicators, challenges such as increased non-memory component pricing and higher operational expenses are expected to impact gross margin percentages and EBIT percentages, warranting caution. Furthermore, the net interest headwind and the need to balance the incorporation of Splunk revenues indicate potential pressure on the financials. Rakers also likely considered the broader market trends, competitive dynamics, and Cisco’s current valuation in maintaining a Hold rating, signaling a view that while the company has promising aspects, there are enough uncertainties to prevent a more bullish recommendation at this time.
Rakers covers the Technology sector, focusing on stocks such as Intel, Micron, and Western Digital. According to TipRanks, Rakers has an average return of 28.3% and a 69.40% success rate on recommended stocks.
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Cisco Systems (CSCO) Company Description:
Cisco offers a broad range of technologies across networking, security, collaboration, applications and the cloud. It manufactures and sells Internet Protocol (IP)-based networking and other products related to the communications and IT industry and also provides associated services. The company was founded by Sandra Lerner and Leonard Bosack on December 10, 1984 and is headquartered in San Jose, CA.
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