HSBC Downgrades Cisco (CSCO) to Hold

HSBC analyst Stephen Bersey downgraded Cisco (NASDAQ: CSCO) from Buy to Hold with a price target of $120.00 (from $137.00).

The analyst comments: “Cisco shares are trading at 20.9x CY27e non-GAAP PE vs 21.4x median for the sector. We consider the slight discount warranted as we expect Cisco’s long-term non-GAAP EPS CAGR to be about 8% vs the 10-15% which is typical for the sector. We also note that we expect a long-term mid-teens non-GAAP EPS CAGR for a number of companies including Microsoft, Meta, Alphabet, Amazon and ServiceNow that are trading at similar or even lower multiples than Cisco. Our revised TP of USD120.00 (was USD137.00) is based on a target PE of 23x (from 29.0x previously; 5-year average 15.2x) along with our NTM non-GAAP EPS estimate of USD5.21 (was USD4.74). Our TP implies an upside of 5.8%, and we downgrade our rating to Hold (from Buy previously) as we see better value elsewhere, and as we see growth sequentially decelerating from 2QFY27e onwards, we believe the valuation multiple could come under pressure.”

For an analyst ratings summary and ratings history on Cisco click here. For more ratings news on Cisco click here.

Shares of Cisco closed at $113.47 yesterday.

You May Also Be Interested In

• Wolfe Research Downgrades T-Mobile (TMUS) to Peerperform
• Kontoor Brands (KTB) PT Raised to $105 at BTIG
• Globant S.A. (GLOB) PT Lowered to $45 at Needham