Cisco
is restoring confidence in its order book and future demand after a wobble earlier this year. However, those hoping the company is set for a growth boost from providing network equipment for artificial intelligence will have to wait for a while, according to Wall Street analysts.
Cisco
(ticker: CSCO) reported a strong rise in product orders for its fiscal fourth quarter and that should settle nerves after disappointing guidance the previous quarter.
“Notably, Cisco committed to showing operating leverage and sustaining a more consistent buyback going forward (~ [approximately] $1.5 billion quarterly cadence)—both these factors will resonate with investors,” Evercore analyst Amit Daryanani wrote.
Daryanani raised his target price on Cisco to $63 from $60.
Cisco shares were up 2.6% at $54.35 in premarket trading on Thursday. The stock was up 11% this year through to Wednesday’s close.
“Underlying commentary around demand remains constructive and highlights resilience across most end markets,” analysts at Deutsche Bank wrote in a research note. They kept a Hold rating and a $54 target price on the stock.
The question now is whether the growth in AI could be a boon for Cisco. The company has rolled out more versions of its Silicon One networking chips, which it has claimed will be the most powerful of their type for AI workloads. On Wednesday it reported $500 million in AI-related orders to date.
“The company appeared confident on Ethernet-based AI (Silicon One) opportunities…but sees demand inflection more likely in FY25 [full-year 2025], similar to peers,” KeyBanc’s Thomas Blakey wrote in a research note.
Blakey kept a Sector Weight rating on the stock, noting Cisco is currently trading at around 14 times its forward earnings. He noted a higher valuation would require consistent signs of share gains and improved visibility on the ramp up in orders in its current fiscal year.
Write to Adam Clark at [email protected]
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