Two 59%+ winners, four above 25% in Aug – How this AI model keeps picking winners
Investing.com - KeyBanc Capital Markets maintained its Overweight rating and $77.00 price target on Cisco (NASDAQ:CSCO) following the company’s fourth-quarter earnings results that exceeded expectations. The company, currently trading near its 52-week high with a market capitalization of $275 billion, has demonstrated remarkable strength with a 59% return over the past year according to InvestingPro data.
The networking giant delivered strong performance in its Networking segment, which helped offset weaker results in the Security division. KeyBanc noted that Cisco’s product order growth remains healthy at 7%, despite the company providing fiscal year 2026 guidance of 5% year-over-year growth that aligns with consensus estimates. With robust financials including a 65.6% gross profit margin and $12.8 billion in levered free cash flow, Cisco maintains its position as a prominent player in the Communications Equipment industry.Discover 12 additional exclusive InvestingPro Tips and comprehensive financial analysis in our detailed Pro Research Report, helping investors make informed decisions about this industry leader.
KeyBanc suggested investors should look beyond weakness in the Public Sector, which likely impacted Security growth, and instead focus on growth opportunities in Hyperscaler/Enterprise AI, Neoclouds, and Sovereign cloud initiatives that could compensate for the softness.
The investment firm believes Cisco warrants a premium to its historical valuations due to several factors, including its exposure to artificial intelligence growth, an ongoing shift toward software and subscription-based revenue, healthy free cash flow growth, and continued shareholder returns.
KeyBanc maintained its $77 price target, which represents a multiple of 13.1 times the company’s projected adjusted EBITDA for 2027.
In other recent news, Cisco Systems Inc. reported its fiscal fourth-quarter earnings, surpassing Wall Street expectations. The company achieved an earnings per share of $0.99, exceeding the forecast of $0.98, and reported revenue of $14.7 billion, slightly above the anticipated $14.62 billion. This represents an overall revenue growth of approximately 8% year-over-year, with its core networking segment growing more than 12%. Following these results, Evercore ISI adjusted its price target for Cisco to $74 from $72, maintaining an "In Line" rating. In addition, BofA Securities raised its price target to $85 from $76, maintaining a Buy rating. BofA Securities highlighted Cisco’s revamped portfolio and a significant infrastructure cycle driven by AI and data growth as reasons for the upgrade. These developments reflect positive momentum for Cisco, despite a slight dip in its stock during regular trading hours.
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