Evercore ISI upgrades Cisco, sees 'plenty of tailwinds'

Investing.com -- Cisco shares received a boost, trading around 1.6% higher premarket after Evercore ISI upgraded the stock to Outperform, arguing that the company is positioned for “high single-digit sales and low-teens EPS growth on a multi-year basis.”

In a note to clients, Evercore ISI said the stock remains attractive at “under 20x P/E vs. large cap tech peers” and raised its price target to $100 from $80.

Analysts at Evercore ISI highlighted four core drivers behind the upgrade, beginning with an accelerating cycle in enterprise networking.

The firm said its checks point to “sustained growth in campus markets through CY26 (~6-8%E industry growth)” as customers upgrade to next-generation campus solutions eight years after the last major refresh.

Cisco’s move toward End of Life and End of Services on legacy Catalyst 4K and 6K hardware, representing “~20% install base,” is expected to add momentum.

Evercore ISI also pointed to rising AI-related demand. The firm estimates that Cisco is on track to generate “AI revenues of ~$3.0B in FY26E (~5% of sales) and orders of >$4.0B (vs. $2.0B LY),” supported by four major hyperscaler customers.

New products such as the P200 and increasing adoption of Silicon One were cited as additional catalysts.

Traditional enterprise and telecom markets are also recovering, providing “better diversity of growth as we move forward.”

On profitability, Evercore ISI said Cisco can deliver “~50-100bps of EBIT margin expansion annually,” though it cautioned that performance in security and collaboration remains a risk.

Overall, Evercore ISI said the combination of campus upgrades, AI momentum and improving end markets gives Cisco “plenty of tailwinds” to support a sustained growth outlook.

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