Cisco's stock reached a record high on Thursday, driven by impressive fiscal third-quarter results that exceeded analysts' expectations. Morgan Stanley, which has an overweight rating on the company, raised its price target for Cisco from $91 to $120, suggesting an 18% upside from the stock's closing price on Wednesday.
Analyst Meta Marshall highlighted that Cisco's growth is the strongest seen in 15 years, and there is potential for further upward revisions in earnings estimates. Following the earnings report, Cisco's shares surged 14% in early trading, peaking just above $119.
For the quarter ending April 25, Cisco reported adjusted earnings of $1.06 per share, slightly above the $1.04 anticipated by analysts, and revenue of $15.84 billion, surpassing the consensus estimate of $15.56 billion. Looking ahead, Cisco expects adjusted earnings for the fiscal fourth quarter to be between $1.16 and $1.18 per share, exceeding the $1.07 estimate.
Morgan Stanley's new price target implies a valuation of approximately 25 times the expected earnings of $4.70 per share in 2027, which is comparable to other major tech companies like Nvidia, Oracle, and Microsoft. The firm also noted a robust AI upgrade cycle that supports a higher valuation for Cisco, which is performing slightly above its long-term growth model.
Overall, 18 out of 26 analysts covering Cisco have a buy or strong buy rating, and the stock has appreciated 52% year to date