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Investing.com -- Evercore ISI downgraded Cisco to In Line in a note to clients on Monday, citing limited near-term upside after a strong 46% rally over the past 12 months.
The firm maintained its $72 price target, noting the stock now trades within 6% of that level.
“We are downgrading Cisco to In Line as the stock is within 6% of our price target of $72,” Evercore ISI wrote. “The upside has been driven by a cyclical recovery in their core enterprise networking business as well as a more compelling narrative around cloud & AI markets.”
While Cisco has seen multiple expansion, now trading at approximately 18 times earnings versus its five-year average of 14, Evercore ISI flagged the company’s limited AI disclosures.
“Cisco will struggle to get credited as an AI winner without disclosing AI revenue numbers,” the analysts wrote. “Thus far, they have only disclosed AI orders.”
Evercore also pointed to challenges in the company’s Security and Observability segments, noting that “legacy portions of those segments have seen low single-digit growth for the past three quarters.”
Cisco’s AI strategy was described as “compelling,” with early signs of traction in hyperscale markets via Silicon One and long-term potential in enterprise AI.
But the analysts warned that material gains in the enterprise space “may not become material until 2027+.”
In addition, the “campus networking recovery thesis has largely played out,” and order growth comps are expected to become more difficult starting in July 2025. The CFO transition is said to add further uncertainty to FY26 guidance.
“Net/net: We think the management team has done a solid job … but we think the upside is largely priced in,” Evercore ISI concluded.