Ticker: NASDAQ: CSCO Sector: Technology Recommendations: Strong Buy
Price: USD $23 Industry: Networking Price Target: USD $32.50
Highlights:
Absolute Return
Target Price $32.50
Current Price $23
Upside Potential 50%
I recommend a strong buy on Cisco’s stock with a target price of $32.50, a 50% upside from its current price. Cisco has a solid competitive advantage, because there are not many strong competitors in the market. The other firms show a higher P/E ratio than Cisco because they have a lower market share. The company shows a constant growth. Cisco markets its products globally with the highest market shares than its competitors. The main risks for Cisco are worsening of economic conditions or exchange rates. The company has a good growth in sales, which will lead higher profits. The company also gives out an annualized dividend to its shareholders every year.
Business Description:
Cisco Designs, manufactures, and sells Internet Protocol (IP) - based networking and other products related to the communications and information technology (IT) industry and provide services associated with these products and their use. The company provides products for transporting data, voice within buildings, across campuses and globally. The products are utilized at enterprise businesses, public institutions, telecommunications companies and other service providers, commercial businesses, and personal residences. Cisco conducts its business globally and manages its business geographically. Its business is divided into the following three geographic segments: The Americans; Europe, M...
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...d the cost of equity I made a sensitivity analysis chart for Cisco through which I came up with the target price of $32.50. This chart shows the different price ranges of the stock which could be possible if the Terminal Value Perpetuity Growth Rate went higher or lower compared to the Cost of Equity.
Based on the Terminal P/E and the cost of equity I made a sensitivity analysis chart through which I came up with a price of $33.37. This chart shows the different price ranges of the stock which could be possible if the Terminal P/E went higher or lower compared to the Cost of Equity.
Comparing both the charts above I think the target price of $32.50 is accurate for the company’s stock.
Works Cited
• http://secfilings.nasdaq.com/edgar_conv_html%2f2013%2f09%2f10%2f0000858877-13-000049.html#FIS_BUSINESS
• http://www.nasdaq.com
• http://www.cisco.com/
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PER EMPLOYEE $574.29K P/E RATIO 22.84 EPS $5.92 YIELD 2.49% DIVIDEND $0.84 EX-DIVIDEND DATE Aug 25, 2017 SHORT INTEREST 15.9M 06/30/17 % OF FLOAT SHORTED 0.59% AVERAGE VOLUME 5.7
Recommendation of this stock as an investment opportunity. Support rationale with resources such as peer-reviewed articles or material from the Strayer
The Company recently raised its dividend, now $0.96 on an annualized basis. This dividend may provide some downside support.