Cisco (NYSE: CSCO) stock price retreated sharply from 52-weeks high of $58 that it had hit three months ago. In addition, CSCO shares are currently trading slightly high from this year’s low of $40.
Trading around $46 analysts believes Cisco stock price is presenting a strong buying opportunity for long term investors. Analysts claim it’s a perfect entry point for both short term value investors and long-term dividend investors.
The Dip in Cisco Stock Price is a Buying Opportunity
Evercore analyst Amit Daryanani says Cisco is in a position to capitalize on demand from emerging markets. This is because of its extensive footprints in global markets.
The analysts expect the company to maintain a leadership position in key categories. Daryanani has set a price target of $60 for Cisco with outperform ratings.
Piper Jaffray and RBC Capital Markets have set the Cisco price target at $55.
The analysts believe Cisco’s strategy of investing in non-organic growth opportunities would add to the revenue base. The company recently announced two acquisitions. These acquisitions include CloudCherry and Voicea.
Financial Numbers are Supporting Dividends
The company appears in a position to support its dividends. It currently offers a quarterly dividend of $0.35, yielding around 3%. It has increased quarterly dividends in the past eight consecutive years. Its financial numbers are supporting dividend growth.
The company generated year over year revenue growth of 6% to $13.4B in the fourth quarter of FY2019. Moreover, the revenue of $52.5 billion for the full year rose 7% from the past year.
Its CFO says, “We continue to transform our business model with software subscriptions now at 70% of our software revenue. The returns on our investments in key strategic areas position Cisco for long-term growth and shareholder value.”
In addition, its cash flows are strong enough to cover dividends. It generated an operating cash flow of $4 billion in the latest quarter. The dividend payment stood at $1.4 billion. The huge gap in dividend payments and operating cash flows offer a room for investment in growth opportunities. On the whole, Cisco stock price has strong fundamentals and its dividends are safe.
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