Analyst Tal Liani from Bank of America Securities reiterated a Buy rating on Cisco Systems (CSCO – Research Report) and keeping the price target at $60.00.
Tal Liani’s rating is based on a positive assessment of Cisco Systems’ recent financial performance and growth prospects. The company’s third-quarter product revenue surpassed expectations by approximately $70 million, and its earnings per share of $0.88 exceeded analyst predictions by six cents. This outperformance is significant, even when considering that it came after a period of moderated expectations. Furthermore, Liani emphasizes the company’s potential for growth acceleration in fiscal year 2025, pointing to an expected increase in core growth excluding Splunk of about 5% year-over-year. This growth is projected to be driven by an enhanced security portfolio, a recovery in orders for campus and data center switching, and a significant opportunity in Ethernet-based AI networking gear, with anticipations of reaching $1 billion in orders.
Additionally, Liani notes improvements in Cisco’s security offerings with recent launches and the integration of Splunk into Cisco’s channels, which is expected to contribute positively to the company’s distribution capabilities next year. The company’s strong gross margin performance, coupled with disciplined cost management leading to increased operating margins, further supports the Buy rating. Liani acknowledges the contribution of Splunk to both gross margin and free cash flow for the upcoming fiscal year, with synergies likely to be realized in the second half of the year. These factors, combined with the expectation of a solid core revenue growth, substantiate Liani’s Buy rating and a price objective of $60.00 for Cisco Systems’ stock.
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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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