Cisco Systems, Inc. (NASDAQ: CSCO) shares have been advancing last several days, and the technical picture implies that the price could advance above the $50 resistance this month.
Cisco is attractively valued
Cisco is a healthy and stable technology company that could generate more profitability due to having a more software-oriented management team.
A multinational investment bank and financial services company UBS announced last week that it believes in constant product innovation in the field of cyber security, in which Cisco has significant upside potential.
According to UBS, AI, big data, and cyber security fields are at an inflection point that should see faster adoptions in the next few years. UBS strategist Sundeep Gantori said:
We forecast the combined revenues of the three segments will grow from $386 billion in 2020 to $625 billion in 2025, implying an average clip of 10% annually, higher than the mid- to high-single digits we forecast for the broader tech sector.
Cisco continues to move in the right direction, and the stock price is attractively valued given its steady revenue growth and strong free cash flow generation.
Cisco reported fourth-quarter results last month; total revenue reached $13.1 billion, which was $320 million above expectations, while GAAP EPS for the same period was $0.83 (beats by $0.01).
The board of directors declared a $0.38/quarterly share dividend which will be payable on October 26 to stockholders of record as of October 5, 2022.
The supply chain constraints that affected Cisco’s business last several months began to ease slightly in the back half of the fourth quarter, and Chief Executive Chuck Robbins said that he expects the company to see strong performance in the upcoming quarters.
The company’s management expects a 4% – 6% revenue growth rate for the 2023 fiscal year, while the EPS should be between $2.77-$2.88.
Cisco trades at less than thirteen times TTM EBITDA, and with a market capitalization of $188 billion, shares of this company represent an opportunity for long-term investors.
$50 represents the first resistance level
Cisco’s business continues to grow; the company reported better than expected fourth-quarter results last month, and the technical picture implies that the price could advance above $50 resistance this month.
Data source: tradingview.com
Rising above $50 supports the continuation of the positive trend, and the next price target could be located at $55.
On the other side, if the price falls below $43, it would be a “sell” signal, and we have the open way to the strong support that stands at $40.
Summary
Cisco Systems shares have been advancing last several days, and the technical picture implies that the price could advance above the $50 resistance in September 2022. Cisco is in a good position to grow its business, and with a $188 billion market capitalization, this stock is not expensive, and the risk/reward ratio is attractive for long-term investors.
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