Cisco Price Target Increased By Argus, Buy Rating Maintained

Cisco Systems’ (NASDAQ:CSCO) price target was recently increased by more than 8% to $37 from $34 by investment firm, Argus. In addition, analysts reiterated the Buy rating on the stock.

Following the news, Cisco’s share price was up 0.13% to $30.52.

Why the Hike?

Analysts at Argus remain optimistic about Cisco’s market dominance and growth prospects in the strengthening cloud computing market.

Cloud computing is a flourishing domain in the technology space. It is a procedure by which data or software is stored outside a computer, but can be easily accessed anywhere and at any time via the Internet. Cloud computing is gaining traction as it can cut IT costs significantly for companies by eschewing the need for maintaining expensive servers and trimming maintenance staff.

The analysts believe that Cisco's technology leadership and its aggressive move into cloud computing leverages its existing networking and data center investments, thereby expanding the company’s market share by attracting new customers.

Chuck Robbins, Cisco’s CEO, further made matters clear when he said that the company’s increasing momentum in security, collaboration and data center, software and services is offsetting slow growth in the core businesses of routing and switching.

The analysts at Argus further cited the strong fiscal fourth-quarter earnings as one of the reasons behind the price hike. The company’s earnings of 58 cents exceeded the Zacks Consensus Estimate by 3 cents. Also, revenues increased 5.3% sequentially but declined 1.6% year over year to $12.6 billion, which came above the Zacks Consensus Estimate of $12.5 billion.

Moreover, the analysts remain encouraged by the recent announcement to reduce the head count by 5,500 positions or 7%. Cisco intends to reinvest the cost savings from these actions in key priority areas such as security, IoT, collaboration, next generation data center and cloud.

With its sustained focus on innovation and growth areas, strength within the cloud business and restructuring initiatives, analysts at Argus remain positive about the company’s success in the future.

Conclusion

Cisco Systems is the leading provider of IP-based networking and other products. The company’s market position, innovation, product range, growth initiatives, new investments and dividend payout are all positives.

Additionally, overall growth prospects remain positive because of the drive toward cloud computing and increasing data flow on carrier and computing networks. The recent acquisition of CloudLock will help Cisco to far-flung its efforts and meet the changing compliance and security needs. However, the increasing competition and challenges in China remain major concerns for the Zacks Rank #3 (Hold) stock.

Stocks to Consider

Some well-placed stocks in the same space are Silicon Laboratories Inc. (NASDAQ:SLAB) , sporting a Zacks Rank #1 (Strong Buy), while Intel Corp. (NASDAQ:INTC) and Inphi Corp. (NYSE:IPHI) , each, are sporting a Zacks Rank #2 (Buy).