Cisco Systems, Inc CSCO The stock rose in after-hours trading on Wednesday after the company reported positive fourth-quarter results. The share price remained up on Thursday.

The results were released during an exciting earnings season. Here are some key insights from the analysts.

Cisco reported fourth-quarter revenue of $13.64 billion, beating analysts’ consensus estimate of $13.537 billion. The company reported adjusted earnings per share of $0.87, beating analysts’ consensus estimate of $0.85.

Needham analyst Alex Henderson reiterated his “hold” rating on Cisco.

Oppenheimer analyst Ittai Kidron maintained his outperform rating on Cisco with a price target of $58.

Piper Sandler analyst James E. Fish reiterated his neutral rating with a price target of USD 52.

Tal Liani, analyst at BofA Securities, maintained a buy rating for Cisco with a price target of $60.

Needham: Henderson said Cisco is probably a safe place to put money for investors who fear a recession, but it is not a better place for investors who expect interest rate cuts.

The analyst said Cisco showed positive order growth for the second quarter in a row, albeit on a low basis. He also noted that Cisco is losing market share in the networking space to Arista, Juniper and Extreme, in the security space to Palo Alto, Zscaler, Crowdstrike and others, and in the collaboration space to Zoom and Microsoft.

Henderson forecast first-quarter revenue of $13.8 billion and earnings per share of $0.87.

Oppenheimer: Cisco reported a solid fourth quarter, beating forecasts, as inventory reduction headwinds eased, organic security revenue growth accelerated and order growth recovered.

The analyst is optimistic about opportunities in SaaS and cloud, including security and collaboration, which will drive higher recurring revenue.

The analyst pointed to attractive fiscal 2025 conditions and an outlook (which calls for 3% year-on-year growth) that could be exceeded given continued improvement in enterprise order growth, a large opportunity in AI infrastructure, continued security momentum behind SASE and XDR, and a recovery in network security.

Kidron forecast first-quarter revenue of $13.7 billion and earnings per share of $0.87.

Piper Sandler: Fish pointed to the sustainability of management’s belief that demand will return to normal, as well as Cisco’s continued shift in investments to AI, cloud and security. Given the macroeconomic situation, the potential for cost savings in margins, the influence of Splunk and the organizational changes, this is leading to the collapse of the company’s product structure.

The target multiple remains a discount to large-cap peers (27x), which Fish said was justified given Cisco’s slower growth. He raised the multiple slightly to reflect better AI order trends and better-than-expected fiscal 2025 guidance.

Fish forecast first-quarter revenue of $13.8 billion and earnings per share of $0.88.

BofA Securities: The re-rating is based on Liani’s belief that networking should return to growth due to the normalization of demand for campus switching. Ethernet-based AI buildouts and new product announcements should help the revival of the security business. The analyst noted that Splunk synergies support growth initiatives in security and observability. In addition, Cisco’s shift to recurring revenue and subscriptions is positive and supports the stock as 50% of revenue is now recurring, Liani said.

With the stock underperforming the NASDAQ by 24% year-to-date and Liani expecting growth and margin improvements in fiscal 2025, the analyst noted that Cisco represents an attractive opportunity. The price target is based on a ratio of about 14.5 times enterprise value to free cash flow using Fish’s calendar year 2025 estimate, which is in line with tech peers at 9x-20x (reasonable given Cisco’s stability and high dividend yield of over 3.0%).

Liani forecast first-quarter revenue of $13.8 billion and earnings per share of $0.87.

Price promotion: CSCO shares were trading 7.20% higher at $48.72 at last check on Thursday.

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