Cisco Systems Share Price Forecast February 2022 – Time to Buy CSCO?
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Shares of American multinational technology conglomerate Cisco Systems (NASDAQ: CSCO) are in the red today, after closing at $56.30 as of February 22nd (19:58 EST). Cisco shares have increased about 7% over the past three months, despite inflation, rising interest rates, and geopolitical conflicts. The company’s stock continued to increase after it released its second-quarter earnings report on Feb. 16.
Cisco Systems – Technical Analysis
The financial statement released by Cisco Systems indicates a market cap of $237.451 billion with total assets worth $94.262 billion. Revenue for 2021 is at $49.82 billion with a profit margin of 21.26% compared to $49.30 billion in 2020. The company’s revenue increased by 6% year over year to $12.7 billion in the second quarter of fiscal 2022. This beat analyst expectations by $30 million. Adjusted EPS for Cisco Systems increased by 6% to reach $0.84, beating estimates by $0.16.
Moving averages such as Exponential Moving Average (10)(55.52), Simple Moving Average (10)(55.14), Exponential Moving Average (20)(55.94) and Simple Moving Average (20)(55.29) are indicating a buy action. On the other hand, Oscillators such as Relative Strength Index (14)(49.76), Stochastic %K (14, 3, 3)(77.65), Commodity Channel Index (20)(96.41), Average Directional Index (14)(30.67) and Awesome Oscillator(−1.88) are neutral. Some moving averages such as Exponential Moving Average (100)(57.06) and Simple Moving Average (100)(57.23) are indicating a sell action. Some oscillators such as Bull Bear Power (1.74) are indicating a sell action.
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Recent Developments
Cisco Systems was founded by two Standford University students Leonard Bosack and Sandy Lerner in December 1984. The company had achieved more than $500 billion market capitalization by $500 billion market capitalization by the end of the dot-com bubble in the year 2000.
Cisco Systems originally had four reporting segments – infrastructure platforms, applications, security, and services. But starting in fiscal 2022, the company replaced them with six new segments (secure, agile networks; hybrid work; end-to-end security; internet for the future; optimized application experiences; and services). The main aim behind the reorganization was to give investors a clearer view such as Cisco’s slower-growth and higher-growth businesses.
Cisco’s secure, agile networks division got a boost from rising sales of switches and wireless hardware across the data centre and enterprise campus markets. Another segment that experienced accelerated revenue growth is the end-to-end security segment. Cisco’s internet for the future segment benefited acquisitions such as that of Acacia Communications. Cisco has previously made acquisitions such as AppDynamics, Intersight, and Thousand Eyes.
Despite recent rumours indicating that Cisco was mulling a $20 billion takeover of Splunk, CEO Chuck Robbins denied any such plans at the company’s latest conference. Cisco’s weakest link is its hybrid work segment due to waning demand for its on-site conference call, meetings, and contact centre products. It is facing increasing competition from cloud-based services such as Zoom Video Communications and Five9.
Management expects Cisco’s revenue to increase by 3%-5% year over year in the third quarter, and increase 5.5%-6.5% for the full year. The company has authorized a $ 15 billion buyback, which boosts its authorization to $18 billion.
Should You Buy CSCO Shares?
Investors must consider the fact that Cisco posted only a modest revenue growth of 8% year over year for the first quarter of 2022 and analysts at Goldman Sachs have downgraded the shares citing limited upside.
But Cisco shares still offers investors a stable investment proposition. The company has experienced 10 consecutive years of dividend growth and a 2.7% yield. This results in a payout ratio of 45%, which increases the chances of further dividend growth. Many analysts even predict Cisco to become a “Dividend Aristocrat” 15 years from now despite its present situation. Cisco’s stability will also make the shares valuable as rising interest rates spark a retreat toward income-generating value stocks.
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