Update shared on04 Sep 2025
Analysts note that while Cisco’s Q4 results and FY26 guidance met expectations, slowing revenue growth—driven by weaker networking orders and restocking trends—balances optimism around AI, software shifts, and the Splunk acquisition, leading to the consensus view that shares are fairly valued and the price target remains unchanged at $75.81.
Analyst Commentary
- Fiscal Q4 results and FY26 guidance were in line to slightly better than expectations, but revenue growth is decelerating with the networking segment under pressure and consensus estimates missed.
- Several analysts flagged that order growth has slowed, with concerns that the restocking effect is losing momentum and remaining performance obligations suggest softer forward demand.
- Bullish analysts point to solid AI infrastructure order flows expected to support 2026 revenue, ongoing campus/data center refresh cycles, modernization efforts, and cost/revenue synergies from the Splunk acquisition.
- The shift toward recurring/subscription and software-driven revenues, along with healthy product order growth and attractive relative valuation versus peers, is viewed positively for longer-term shareholder returns.
- While AI strength and portfolio enhancements are highlighted, guidance for the second half of 2026 implies muted growth (less than 5%), raising questions around prior “peak growth and peak multiple” expectations and suggesting the shares are fairly valued at current levels.
What's in the News
- Citi is preparing for an IPO of its Mexican retail unit, Banamex, with CEO Jane Fraser meeting Mexico's president as Mexico and the US negotiate tariff issues (Bloomberg, 2025-08-12).
- Piper Sandler raised Citi’s price target to $104 from $84, citing improved EPS estimates and favorable Q2 earnings, maintaining an Overweight rating (Piper Sandler, 2025-07-16).
- Citi is set to launch a new premium credit card, Strata Elite, with a $595 annual fee, targeting affluent travelers through enhanced rewards (WSJ, 2025-07-27).
- Citi is increasing its integration of AI, with tools like Citi Assist and Citi Stylus, paralleling larger industry adoption by peers such as Goldman Sachs and Bank of America (Reuters, 2025-06-24).
- Regulatory changes are planned to cut the enhanced supplementary leverage ratio (eSLR) for the largest US banks—including Citi—potentially lowering capital requirements and freeing up capital for shareholder returns (Bloomberg, 2025-06-18).
Valuation Changes
Summary of Valuation Changes for Cisco Systems
- The Consensus Analyst Price Target remained effectively unchanged, at $75.81.
- The Discount Rate for Cisco Systems remained effectively unchanged, at 8.10%.
- The Consensus Revenue Growth forecasts for Cisco Systems remained effectively unchanged, at 4.8% per annum.
Disclaimer
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