/Cisco%20Systems%2C%20Inc_%20magnified%20logo-by%20Pavel%20Kapysh%20via%20Shutterstock.jpg)
Headquartered in San Jose, California, Cisco Systems, Inc. (CSCO) is a technology leader recognized for its contributions to networking and telecommunications. With a market cap of $195.20 billion, Cisco is known for its pioneering innovations in networking hardware, software, and cybersecurity solutions. The company has been instrumental in shaping the digital landscape by enabling seamless connectivity and secure global communication.
Shares of CSCO have significantly underperformed the broader market over the past year. The stock has declined 10% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 19%. In 2024, CSCO stock is down 6.2%, while the SPX is up 14.2% on a YTD basis.
Narrowing the focus, CSCO’s underperformance looks less pronounced when measured against the iShares U.S. Telecommunications ETF (IYZ). The exchange-traded fund has gained marginally over this period. Also, the stock's YTD loss is behind the exchange-traded fund's marginal decline over the same time frame.
Cisco's underperformance relative to the broader market can be attributed to decreased demand from key telecom and service provider customers, ongoing macroeconomic uncertainty, extended equipment absorption, and slower growth in new orders. Following its Q3 earnings report on May 15, Cisco's stock rose by 1.5%. However, it declined in subsequent trading sessions despite surpassing analyst expectations.
For the current fiscal year, ending July 2024, analysts expect CSCO’s EPS to decline 8.2% to $3.14 on a diluted basis. The company's earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 24 analysts covering CSCO stock, the consensus rating is a “Moderate Buy.” That’s based on five “Strong Buy” ratings, two “Moderate Buys,” and 17 “Holds.”
On Jul. 8, Analyst Matthew Niknam from Deutsche Numis maintained a ‘Hold’ rating on the stock with a price target of $52, implying a potential upside of 9.7% from current levels.
The mean price target of $54.50 represents a 15% premium to CSCO’s current price levels. The Street-high price target of $60.4 suggests an upside potential of 38.6%.
On the date of publication, Rashmi Kumari did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
