Cisco Stock: This Could Be Massive for Cisco Systems, Inc.

Cisco biggest gain in value?

If Cisco Systems, Inc.  stock was not on their watch list before, it must be now. Why? The network equipment company could be on the verge of its next big rally.

I explain ...

What Piper Jaffray, Oppenheimer, Citigroup, Deutsche Bank and Jefferies Group have in common? They all gave the Cisco stocks a recommendation from "buy" on Thursday. (Source: "Cisco Systems Company Profile" market coup, last accessed 19 May 2016)

Of course, analysts do not always right. But for all these companies to evaluate a "Buy" in an action, you have something special.

Price targets are rather optimistic, too. For example, the Deutsche Bank has a target of $ 33.00 $ 35.00 price of shares of Cisco. In the middle, this would imply an increase of 23.3%, even after the rise on Thursday. (Source: Ibid.)

You could say that the mere possibility of 23% is not much in the area of ​​technology today, and see how a little broth streaming video won last year. But it's really not a fair comparison. You see, while Cisco is a high-tech company, which is not a disruptive stronger. The company has already established its presence. It has existed for over three decades.

In fact, Cisco could almost be considered as a social income today. With a dividend yield of 3.92%, which is impressive in the world of technology. In addition, since the company began paying quarterly dividends in 2011 it increased seven times since its dividend. (Source: "dividends and splits", Cisco Systems, Inc., entered May 19, 2016.)

If the action can offer capital gains with his beautiful dividend yield would be even better. And a strong earnings report is certainly a good way to spark a rally.

In the third quarter of Cisco's fiscal year 2016, which generated revenues of $ 12.0 billion, representing an increase of three percent YoY. The number of revenue also exceeded Wall Street estimates of $ 11.97 billion. (Source: "Cisco Reports Third Quarter Results", Cisco Systems, Inc., May 18, 2016.)

Earnings per share (EPS) were better than expected as well. During the quarter, Cisco adjusted EPS rose six percent annually to $ 0.57, which also exceeded the estimate of $ 0.55 by analysts. (Source: Ibid.)

Note that in the current economic environment, growth of Cisco's business will not be as it was in the nineties. At the same time, business spending has been very strong. In particular, many companies outsource their work computer for cloud service providers like Amazon.com, Inc. (NASDAQ: AMZN) and Microsoft Corporation
The combination of slow growth macro environment with the tendency to move to cloud computing, the outlook does not come out really optimistic for Cisco. And indeed, these concerns have been a drag on shares of Cisco, which had a negative performance over the last 12 months.

However, the company said, things could not be as bad as analysts expected.

For the current quarter, Cisco expects revenue are in the range of $ 12.36 billion to $ 12.73 billion, which is better than analyst expectations of $ 12.4 billion, for most. The company also expects earnings of between $ 0.59 and $ 0.61 per share, which is at the top of the new estimate of $ 0.58 Wall Street. (Source: Ibid.)

Another reason why investors warmed to store the profitability of Cisco. Normally, when an established and oriented headwinds, industry margins are expected to decline. But this is not the case with Cisco. In its fiscal third quarter, gross margin Cisco products reached 63.8%, representing an expansion of 220 basis points compared with the period last year. During the quarter, the company expects its gross margin is between 63% and 64%