Headquartered in San Jose, California, Cisco Systems, Inc. (CSCO), boasting a market cap of $195 billion, powers the world's connections with innovative networking and IT solutions. From seamless campus and data center switching to secure enterprise routing and cutting-edge wireless technologies, Cisco delivers reliable connectivity worldwide.
Shares of Cisco have underperformed the broader market considerably over the past year. CSCO has gained 1.1% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 27.5%. In 2024, CSCO stock is down 4.7%, while the SPX is up 11.2% on a YTD basis.
Narrowing the focus, CSCO’s underperformance looks more pronounced in comparison to the Information Technology ETF Vanguard (VGT). The exchange-traded fund has gained 35.1% over the past year, significantly outperforming CSCO’s marginal return for the period.
CSCO’s weak price action relative to the broader indexes over the past year can be attributed to its diminishing profits. Moreover, following its Q2 earnings report on Feb. 14, the networking giant’s shares dropped due to declining top and bottom lines and a reduced full-year outlook.
However, on May 15, Cisco Systems stock rose after the company posted a smaller-than-expected decline in Q3 revenue, boosted by the $28 billion acquisition of cybersecurity company Splunk. This landmark purchase, Cisco's biggest ever, marks a major move into the artificial intelligence space.
For the current fiscal year, ending in July, analysts expect CSCO’s EPS to decline 8.5% year over year to $3.13. However, the company’s earnings surprise history is solid. It beat the consensus estimate in each of the last four quarters.
The consensus view on CSCO is bullish overall. Among the 24 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on five “Strong Buy” ratings, two “Moderate Buys,” and 17 “Holds.”
This configuration is slightly more bullish than two months before, when the stock had a consensus "Hold” rating, with four analysts suggesting a “Strong Buy,” and one advising a “Strong Sell.”
On May 16, Piper Sandler adjusted its outlook on Cisco Systems, raising the price target from $51 to $52, while maintaining a "Neutral" rating on the stock. The bump followed Q3 earnings that met expectations and showed strong demand. Despite positive lead metrics surpassing projections, the analyst flagged potential weaknesses in Cisco's core networking, security, and collaboration segments, hinting at areas needing attention.
The mean price target of $54.89 suggests a 14% upside potential from CSCO’s current levels. The Street-high target of $76 represents an impressive upside potential of 57.8%.
On the date of publication, Kritika Sarmah 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.
