Cisco stock price target raised to $85 from $76 at BofA Securities

BofA Securities has upgraded Cisco's (CSCO) price target to $85.00 from $76.00, maintaining a Buy rating, driven by the networking giant's revamped portfolio, a significant infrastructure cycle fueled by AI and data growth, and improved execution. This positive outlook follows Cisco's fiscal fourth-quarter earnings, which surpassed analyst expectations with EPS of $0.99 and revenue reaching $14.7 billion. Despite an initial stock decline during regular trading hours, CSCO saw a modest after-hours increase, indicating continued investor confidence in its performance and strategic direction.

Analysis

Bank of America has materially raised its price target for Cisco (CSCO) to $85.00 from $76.00, maintaining a Buy rating and signaling heightened confidence in the company's trajectory. This bullish revision is grounded in several key factors: a revamped product portfolio, improved operational execution, and significant tailwinds from an AI-driven infrastructure spending cycle. The upgrade is substantiated by Cisco's recent fiscal fourth-quarter performance, where it surpassed analyst expectations with revenue of $14.7 billion against a $14.62 billion forecast and an EPS of $0.99 versus a $0.98 estimate. Underlying momentum appears robust, with BofA highlighting 10% order growth excluding the weak Federal segment, strong networking trends, and a recovery in Security growth. The valuation basis for the new price target has expanded from an 18x to a 20x multiple on CY26E EV/FCF, reflecting expectations for stronger future cash flow. Despite the stock trading near its 52-week high after a 59.18% gain over the past year, the market's immediate reaction was muted, with a decline in regular trading followed by a modest after-hours uptick, suggesting the positive news may have been partially priced in.

Key Decisions for Investors

• Given the strong earnings beat, positive analyst revision, and secular tailwinds from AI, investors could view the current environment as supportive of the bull case for Cisco, despite the stock trading near its 52-week high.
• Investors should closely monitor future order growth and the performance of the Security segment to validate BofA's thesis that an AI-driven infrastructure cycle and portfolio revamp can sustain momentum.
• The valuation multiple expansion to 20x EV/FCF raises the bar for execution; any deceleration in growth or margin pressure could pose a risk to the new price target.
• The noted weakness in the Federal segment, while excluded from the headline 10% order growth, should be monitored as a potential headwind if it persists or spreads to other segments.