Citi raises Cisco stock price target to $71 from $68

On Thursday, Citi maintained a positive outlook on Cisco Systems Inc. (NASDAQ:CSCO), a prominent player in the Communications Equipment industry with a market capitalization of $244 billion, by raising the price target on the company’s shares to $71.00, up from the previous target of $68.00. The firm continues to endorse a Buy rating for the technology giant, which currently trades at $61.29 and maintains a "Fair" overall financial health score according to InvestingPro analysis.

Cisco’s recent financial performance exceeded expectations for the April quarter and provided an optimistic forecast for the July quarter. With annual revenue of $55.6 billion and a consistent track record of dividend payments for 15 consecutive years, including a current yield of 2.68%, the company has demonstrated strong financial stability. This success was attributed to robust demand in networking, favorable comparisons, and stabilized margins. Notably, Cisco saw growth in networking and data center switch orders, as well as a significant acceleration in cloud AI orders, which jumped from $350 million to $600 million quarter-over-quarter, totaling $1 billion year-to-date. For deeper insights into Cisco’s financial metrics and growth potential, investors can access comprehensive analysis through InvestingPro, which offers additional ProTips and detailed valuation models.

The initiation of AI order conversions was another highlight, signaling the beginning of revenue generation from these engagements. Cisco is also experiencing a surge in enterprise AI order momentum, supported by the launch of multiple new products. Additionally, the potential for "sovereign AI" opportunities, which refer to country-specific AI initiatives, suggests an expanding market for Cisco’s AI solutions. The company’s strong market position is reflected in its 27.1% price return over the past year.

In light of these developments, Citi has slightly increased its EPS estimates for Cisco for fiscal years 2025 and 2026 by approximately 2-3%. The new price target of $71 is based on an elevated price-to-earnings (P/E) multiple of 17.5 times, up from around 16 times previously. The adjustment reflects the firm’s confidence in Cisco’s growing AI business.

Cisco’s performance and future prospects, particularly in the AI space, have led Citi to maintain its Buy rating, with the upgraded price target suggesting a positive trajectory for the company’s stock value.

In other recent news, Cisco Systems Inc. reported a strong third-quarter performance for fiscal year 2025, with earnings per share (EPS) of $0.96, surpassing Wall Street’s forecast of $0.92. The company’s revenue also exceeded expectations, reaching $14.1 billion compared to the anticipated $14.04 billion. This positive financial outcome was attributed to robust growth in AI infrastructure orders and a notable increase in product revenue. Evercore ISI and JPMorgan have both raised their price targets for Cisco, with Evercore setting it at $72 and JPMorgan at $73, citing strong AI order momentum as a key driver. Despite macroeconomic concerns and the potential impact of tariffs, Raymond (NSE:RYMD) James maintained its Market Perform rating on Cisco, acknowledging the company’s resilience and positive outlook. Cisco has also announced a leadership transition, with Mark Patterson set to become the new Chief Financial Officer, ensuring a smooth changeover as the current CFO retires. Additionally, Cisco’s strategic initiatives in AI and networking, including partnerships with major tech firms, continue to bolster its position in the industry.

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