Cisco (NASDAQ: CSCO) shares have advanced from $35.15 above $42 in the last twenty days but this company is still undervalued relative to the market. RBC Capital Markets and Credit Suisse raised its price target for Cisco stock after the company posted better than expected results in Q1.
Fundamental analysis: Cisco shares are still undervalued relative to the market
Cisco Systems, Inc. is an American multinational technology that develops networking hardware, software, telecommunications equipment and other high-technology products. The company is ranked by Fortune magazine at number four of the 100 best companies to work for in 2020.
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Cisco shares are still undervalued relative to the market and this is one of the companies you should be watching closely for a possible long position. The price of the stock has advanced after starting the fiscal year with a softer-than-expected earnings drop, revenues fell 9.3% to $11.93B while net income fell about 11%, to $3.2B in Q1.
“We continued to transform our business through more software offerings and subscriptions, driving 10% year-over-year growth in remaining performance obligations. Our Q1 results reflect good execution with strong margins in a challenging environment,” says CFO Kelly Kramer.
Some analysts also say that Cisco is less overvalued than the entire technology sector and shares of this company did not perform well so far in the 2020 year. The decline in sales and earnings for 2020 are due to the Covid-19 pandemic and there doesn’t seem to be any long-term issues with this company.
RBC Capital Markets boosted its target to $49 after Cisco posted better than expected results in Q1. Credit Suisse also raised its target to $41 from $36 as the company continues transitioning to more recurring revenues.
According to the latest news, Cisco announced its plan to acquire Hungary’s Banzai Cloud – its second recent cloud-native acquisition. This deal could be realized in the next several months and the Banzai Cloud team will join Cisco’s Emerging Technologies.
Cisco is a good value stock right now, the company has raised its dividend for 10 years and the current yield stands around 3.5%. This is a healthy and stable company that can still offer strong potential returns for long-term investors.
There are also some risks when it comes to investing in Cisco shares currently, the correction of the US stock market could be around the corner and if this happens, the price of this stock could easily reach the $30 support level.
Technical analysis: Bears are focused on breaking the support level at $40
When we take a look at the chart above ( one year period), we can see that the price of this stock has weakened from $50 to $32.4 and then started to raise. The current support levels are $40, $38 and $35, $44 and $48 represent the resistance levels.
If the price falls in the upcoming period, every price in a range from $30 – $35 could be a very good opportunity to invest in Cisco shares. On the other side, if the price jumps above the $44 resistance level the next target could be located at $48 or even $50.
Cisco is a healthy and stable company but shares of this company did not perform well so far in the 2020 year. The company has raised its dividend for 10 years and can still offer strong potential returns for long-term investors. Cisco shares are still undervalued relative to the market and this is one of the companies you should be watching closely for a possible long position.