Cisco’s Stock (CSCO) Endures A Tough Week Following Earnings: Analysts Reassess

Cisco Systems' stock (NASDAQ: CSCO) experienced a significant downturn last week, declining 8.63% to $66.20, as its latest earnings report failed to get the bulls moving. The market's reaction reflects a mixed sentiment regarding the networking giant's future growth trajectory.

The week's decline followed Cisco's fiscal fourth-quarter results, which revealed a 7.6% year-over-year revenue increase to $14.67 billion, and non-GAAP earnings per share (EPS) of $0.99.

The company's fiscal year 2026 projections, estimating revenue between $59 billion and $60 billion, and non-GAAP EPS ranging from $4.00 to $4.06, appeared to dampen market enthusiasm, falling slightly short of some expectations.

Adding to the downward pressure on Cisco’s stock was a broader market decline in the final two sessions of the week, triggered by a hotter-than-expected U.S. Producer Price Index (PPI) report. The PPI's 3.3% year-over-year increase in July surpassed economists' expectations, leading traders to temper expectations for imminent interest rate cuts by the Federal Reserve. This macroeconomic factor exerted downward pressure on technology stocks generally, further impacting Cisco.

Analyst opinions on Cisco's prospects remain divided, yet the upside appears to be narrowing according to most.

HSBC downgraded Cisco to ‘Hold' with a $69 price target, citing concerns about slowing growth in remaining performance obligations and the potential end of the restocking effect.

Conversely, BofA raised its price target to $85, maintaining a ‘Buy' rating and emphasizing Cisco's revamped portfolio and the infrastructure cycle driven by AI and data growth.

Evercore ISI also raised its price target to $74, keeping an ‘In Line' rating, acknowledging AI momentum but questioning security growth and networking's future.

Barclays increased its price target to $71, retaining an ‘Equal Weight' rating, noting decelerating order growth.

Piper Sandler raised its price target to $70, maintaining a ‘Neutral' rating, pointing to questions about peak growth and multiples given the fiscal 2026 guidance.

Bullish Shifts:

• BofA maintained a ‘Buy' rating, highlighting a “revamped portfolio” and a significant infrastructure cycle driven by AI and data growth.
• Multiple analysts raised their price targets, including BofA (to $85), Evercore ISI (to $74), Barclays (to $71), and Piper Sandler (to $70).
• The company is experiencing “notable” AI momentum and strength in artificial intelligence (AI) infrastructure orders.

Bear Moves:

• HSBC downgraded the stock to ‘Hold', citing concerns that the restocking effect may be ending prematurely and noting weaknesses offsetting AI strength.
• The fiscal 2026 guidance fell slightly short of some expectations and implies growth of less than 5% in the latter half of the year.
• Analysts noted lingering questions about security growth, the robustness of networking into fiscal year 2026, and decelerating order growth.

Despite the mixed outlook, Cisco's management remains confident in the company's strategic direction, particularly its focus on AI and enhanced networking solutions. The market's reaction, however, underscores the sensitivity of the markets to growth prospects in an environment of evolving economic conditions and technological shifts.

Cisco's ability to leverage its strengths in AI infrastructure, address concerns about security growth, and navigate broader economic headwinds will be critical factors in determining its stock's future performance.