Cisco's financial report "lacks surprises"? Wall Street: Steady improvement driven by AI is more valuable
After Cisco's latest financial report was released, the stock price fell slightly, but analysts remain optimistic about its steady growth, especially in the performance of its networking business driven by demand for AI infrastructure. Bank of America analysts pointed out that although the financial report lacked major surprises, the revenue growth rate of 7.6% slightly exceeded expectations, with improvements in both the networking and security businesses. Bank of America raised its target price to $85, while KeyBanc and Citigroup also maintained their "buy" ratings and raised their target prices
According to Zhitong Finance APP, after Cisco (CSCO.US) released its latest financial report and performance outlook, its stock price experienced a slight decline. However, analysts remain optimistic about its robust growth trajectory, particularly in the network business driven by demand for artificial intelligence (AI) infrastructure.
The Bank of America analyst team led by Tal Liani noted in Thursday's investor report: "Although the financial report and guidance lacked significant surprises, they still slightly exceeded expectations: the 7.6% revenue growth rate was higher than the market expectation of 7.3%, the profit margin met expectations, and earnings per share of $0.99 exceeded consensus expectations by $0.01. More importantly, the company showed continuous improvement in multiple areas—after excluding weak government business, order growth reached 10%, the network business maintained strong momentum, and the security business also showed signs of recovery."
Bank of America reiterated its "Buy" rating and raised its target price from $76 to $85.
Liani added: "Driven by the demand cycle for cloud services and enterprise infrastructure, network business revenue achieved a year-on-year growth of 12% and a quarter-on-quarter growth of 8%. This quarter, AI infrastructure orders reached $800 million, totaling $2.1 billion for the year, with overall network orders achieving double-digit growth in the fourth quarter. Cisco's product portfolio innovation is yielding results across various verticals."
KeyBanc maintained its "Overweight" rating and a target price of $77, while also raising its earnings forecast.
Analyst Brandon Nispel stated in a report: "Based on the latest financial report and guidance, we have raised our revenue forecasts for the fiscal years 2026/2027 by 0.2%/0.4%, and the adjusted earnings per share forecasts have also been raised by 0.2%. We believe the growth in the network business is sufficient to offset the weak performance of other product lines."
Citigroup significantly raised its target price from $71 to $80, maintaining a "Buy" rating.
Analyst Atif Malik stated in a report: "The positive outlook for AI business constitutes a major benefit—network-scale AI orders for fiscal year 2025 are approximately $2.1 billion, with AI-related revenue reaching $1 billion, and network AI orders showing triple-digit growth, while enterprise AI channel reserves amount to several hundred million dollars. Additionally, the campus network equipment upgrade cycle will also bring sustained benefits. However, we believe that achieving over 15% growth in the security business (compared to a year-on-year increase of 9% this quarter) still faces high hurdles."
