Cisco Stock Price Pullback Is a Buying Opportunity, Analysts Say

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.

CSCO Cisco Systems, Inc. daily Stock Chart

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.

Cisco Stock Price Pullback...

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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Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.

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