raisbeckfoto/iStock Unreleased via Getty Images
Shares of Cisco Systems (NASDAQ:CSCO) rose about 2% premarket on Monday after Deutsche Bank upgraded the stock to Buy with a $73 price target.
Analyst Matt Niknam said that their upgrade is based on three key points. Firstly there is improved visibility towards durable mid-single-digit growth in upcoming years, with tailwinds from AI (across webscale, enterprise and sovereign), a Campus portfolio refresh, more favorable near-term competitive dynamics in Networking and improved scale in Security.
Secondly, the analysts noted that high-single-digit (7% to 8%) EPS Compounded Annual Growth Rate, or CAGR, looking forward, supported by an improved revenue mix (56% now through subscription software/services) and stable margins.
Lastly, Niknam noted that Cisco still has a relatively undemanding valuation at 15 times 2026 EPS estimates, a 25% discount to the S&P despite an enhanced revenue mix with incremental tailwinds and improved execution in recent quarters.
More on Cisco
- Cisco: Tactical Buy For Me, Maybe Not For You (Rating Upgrade)
- Cisco Highlights Promise And Potential Of On-Prem Agents And AI
- Cisco Systems, Inc. (CSCO) Bank of America Global Technology Conference (Transcript)
- Biggest stock movers Monday: SRPT, CSCO, and more
- 10 dividend stocks to watch ahead of this week’s inflation reports