BofA Reiterates Buy on $CSCO After Earnings, Sees 33% Upside

Cisco Systems ($CSCO) reported record fiscal fourth-quarter revenue of $17.3 billion, up 18% year-over-year, with adjusted earnings of $1.22 per share. Networking revenue jumped 28% to $9.8 billion, and total product orders rose 35%, with networking orders up 40%. Shares still fell sharply, closing Aug. 18 at $112.90.
Bank of America analyst Tal Liani reiterated a Buy rating and $150 price target, implying roughly 33% upside from the closing price. Liani noted that ex-hyperscaler order growth accelerated from 19% in fiscal Q3 to 25% in fiscal Q4, while orders from Cisco's four largest hyperscalers grew more than 100%, supporting Cisco's decision to double its core growth outlook for fiscal 2027 to 10% from 5%.
Cisco booked $4 billion in AI infrastructure orders from hyperscalers in the quarter, bringing full-year orders to $9.3 billion, with fiscal 2026 AI infrastructure revenue of about $4 billion expected to reach $7.5 billion in fiscal 2027. BofA believes that target could prove conservative and raised its fiscal 2027 adjusted EPS estimate to $5.08 from $4.77, and its fiscal 2028 estimate to $5.47 from $5.21.
Cisco guided for Q1 revenue of $18 billion to $18.2 billion and adjusted EPS of $1.32 to $1.34, with full-year revenue seen reaching as much as $73.4 billion. Adjusted gross margin slipped to 66.3% in Q4 from 68.4% a year earlier, and BofA expects it to fall further to roughly 64.5% in fiscal 2027, about 150 basis points below Street estimates. Liani also noted Cisco trades near 25x calendar 2027 EV/FCF, above its five-year average of about 16x.