Should I buy Cisco shares after Wolfe Research raised its price target to $63?

Written by: Stanko Iliev
April 17, 2021
  • Wolfe Research increased its price target on Cisco to $63 last week
  • For fiscal Q3, Cisco expects revenue growth of 3.5%-5.5% and EPS of $0.80-$0.82
  • If the price jumps above $55 resistance, the next target could be around $60

Cisco (NASDAQ: CSCO) shares continue to trade above $50 support, and with a $218B market capitalization, this stock is still reasonably valued. Cisco is a company with good fundamentals, and Wolfe Research increased its price target on Cisco to $63 last week.

Fundamental analysis: Wolfe Research increased its price target on Cisco to $63 last week

Cisco is a healthy and stable technology company that could generate more profitability due to having a more software-oriented management team. Goldman Sachs recently announced that Cisco shares are still undervalued relative to the market and raised the price target from $50 to $59.

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It is important to mention that Wolfe Research and JPMorgan also positively view this company. Wolfe Research increased its price target on Cisco to $63 last week as the rise of software and “strong IT spending should contribute to multiple expansion.

Cisco reported Q2 2021 results in February; total revenue has decreased by -0.1% Y/Y to $12B while Q2 GAAP EPS was $0.60 (beats by $0.02). Total revenue has decreased below estimates (beats by $100M), and it is important to say that Cisco increased a quarterly dividend by 3% to $0.37 per common share.

“We are seeing encouraging signs of strength across our business, showing how our technology will be a powerful engine for recovery and growth. For fiscal Q3, we expect revenue growth of 3.5%-5.5% and EPS of $0.80-$0.82 (in line with consensus for $0.81),” said  CEO/Chairman Chuck Robbins.

Cisco has raised its dividend for the last ten years, and the stock’s 2.8% dividend payout still remains attractive. Cisco continues to move in the right direction, and in this ongoing bull market, shares of this company have upside potential.

Technical analysis: Positive trend remains intact

Cisco shares have advanced more than 17% since the beginning of 2021, and at the current stock price, this company is reasonably valued.

Data source: tradingview.com

The important support levels are $50 and $45, $55 and $60, represent the current resistance levels. If the price jumps above $55 resistance, it would be a signal to buy Cisco shares, and the next target could be around $60.

Rising above $60 supports the continuation of the bullish trend for Cisco shares, but if the price falls below $45, it would be a strong “sell” signal.

Summary

Cisco is a healthy and stable technology company that could generate more profitability due to having a more software-oriented management team. Cisco declared a $0.33/quarterly share dividend, representing a 3% increase from the prior dividend. Wolfe Research increased its price target on Cisco to $63 last week, and in this ongoing bull market, shares of this company have upside potential.