Cisco shares dropped almost 5% after Piper Sandler cut its price target to $125 from $132, citing concerns about peaking industry growth and lower price-to-earnings expectations. Despite hitting a record high in June due to the AI boom and reporting strong Q4 earnings, analysts remain cautious regarding its long-term growth trajectory, leading to the stock’s recent decline.
Cisco Systems (CSCO) shares took a significant hit on Tuesday, dropping nearly 5% after Piper Sandler, a prominent investment bank, slashed its price target for the networking equipment giant. The firm lowered its target to $125 from $132, citing concerns that the industry's growth trajectory might be peaking.
Chuck Robbins, CEO of Cisco Systems, speaks during the 2026 Semafor World Economy conference in Washington, DC, on April 15, 2026. Kent Nishimura | Afp | Getty Images
Analysts at Piper Sandler expressed worries about declining price-to-earnings multiple expectations, attributing this to a perceived slowdown in the broader industry's expansion. This reassessment comes despite Cisco's stock reaching a record high in June and boasting an an impressive 57% gain over the past 12 months, largely fueled by the massive spending surge from big tech companies building out their artificial intelligence infrastructures. Cisco's shares closed Tuesday at $106.44.
Just last month, Cisco reported robust fourth-quarter earnings, handily beating estimates with $17.25 billion in revenue against LSEG's projection of $16.8 billion. Furthermore, the company provided strong guidance for its fiscal year 2027, projecting nearly 15% revenue growth. However, this optimistic outlook was met with a lukewarm reception from analysts, who anticipate sales growth to taper back into single digits despite the company's strong forecasts.
Piper analysts, while acknowledging the company's own 'conservative' projection in light of market demand, underscored the prevailing skepticism.
Cisco CEO Chuck Robbins addressed the outlook last month, telling CNBC's Jim Cramer, "We're starting a new fiscal year. We're operating in incredible markets... But it's also a time that we're going to start the year being a little bit prudent." This prudence aligns with the company's expected doubling of revenue from hyperscalers – from approximately $4 billion in fiscal year 2026 to an estimated $7.5 billion in fiscal year 2027.
The current market sentiment reflects a cautious approach, balancing Cisco's strong performance in the AI-driven market against broader industry growth concerns.
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