Cisco smart home kit
More than half of revenue now comes from subscriptions / Image source: Adobe
  • Stock has far outpaced Nasdaq and S&P 500 this year
  • Tech nuts and bolts champion getting AI tailwind
  • Global supply chain a crucial advantage, say analysts

Analysts at Deutsche Bank believe now could be a good entry point for an investment in US tech giant Cisco Systems (CSCO:NASDAQ) thanks to a strengthening earnings outlook.

The investment bank sees ‘improved visibility towards durable mid single-digit growth in upcoming years’, pointing to tailwinds across AI infrastructure, enterprise deployments, and sovereign spending.

‘Tailwinds from AI (across webscale, enterprise and sovereign), a Campus portfolio refresh, more favourable near-term competitive dynamics in Networking and improved scale in Security’ are all expected to support revenue momentum, the analyst wrote in a note to clients.

Drawing close attention to projections of a strengthening earnings outlook over the coming months, Deutsche Bank is now forecasting a ‘high single-digit (7% to 8%) EPS CAGR (compound annual growth rate)’, underpinned by an increasingly attractive revenue mix.

VALUABLE SUBSCRIPTIONS

According to Deutsche Bank, around 56% of Cisco’s annual revenue now comes from subscription software and services, good for visibility and cash flows. The shift is expected to support stable margins and allow for continued reinvestment.

In a world where global supply chains have been upended in recent years, Cisco’s supply chain strength is seen as a key competitive advantage. ‘Cisco’s breadth of supply chain enables it to more deftly navigate incremental tariffs and re-invest in growth’, Deutsche Bank wrote.

Cisco shares have rallied close on 11% so far this year, beating the low single-digit returns of the Nasdaq Composite and the S&P 500. The stock also carries a rough 2.5% forward income yield.

Cisco is showing ‘increasing visibility towards delivering on targets’, Deutsche Bank believes.

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Issue Date: 17 Jun 2025