Truist Securities initiated coverage of Cisco Systems (NASDAQ: CSCO) with a Buy rating and a $94 price target, citing multiple growth drivers across its business.
The firm’s positive outlook is based on three key factors. First, Cisco’s core networking segment is benefiting from a cyclical upturn driven by increased investment in AI infrastructure and a multi-year refresh of campus networking products. Truist expects mid-teens product growth in the current fiscal year, with momentum extending into fiscal 2027.
Second, Cisco’s scale, along with an ongoing shift toward higher-margin software and services offerings, has supported stable or improving operating margins despite inflationary pressures and increased investment in AI.
Third, Truist sees improved visibility into double-digit total shareholder returns, supported by an estimated 8% compound annual growth rate in earnings per share from fiscal 2026 through 2029, along with a dividend yield of approximately 2%.
However, the firm also highlighted potential risks, particularly in Cisco’s security segment, which represents about 13% of revenue and has experienced relatively weaker growth. Truist estimates security revenue growth of approximately 1% in fiscal 2026.
If these trends persist, the firm noted, they could weigh on overall growth and investor sentiment, particularly following the stock’s recent re-rating over the past one to two years.
