What happened?

These days, there’s no lack of outperforming stocks. For example, take a look at the stock of Cisco Systems Inc. You will see a steady uptrend since December with very shallow corrections which made the price arrive at the highest levels since November 2000. What are the company’s fundamentals and what can we expect in the future?

Why is it important?

In general

Apart from this year’s success, Cisco did rather well in 2018. The main ace of the company is the fact that it dominates in 5G wireless equipment and this market has big growth potential.

For investors

In February, the company released upbeat guidance and increased dividend payout. Both revenue and earnings exceeded consensus estimates for the fiscal Q2. The sales of the company’s new Catalyst 9000 computer network switches were very inspiring.

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Cisco will deliver its next earnings report on May 15. Analysts are looking for earnings of 77 cents per share on revenues of $12.9 billion.

This week, Goldman Sachs raised Cisco’s price target to 62 from 58 but removed the stock from “Americas Conviction List”, where it lists its best picks. The stock is certainly no longer cheap: its P/E ratio was at 21.77. Still, the company is in a good place of its product cycle and will likely show good revenue and profit in the upcoming periods, so there’s sense to think about buying on the dips.  

For traders

Cisco stock gained more than 30% in 2019. The fact that the price rose above the key long-term level of $54 has opened the way up to the $66 area. Notice, however, that there’s a gravestone doji candlestick at the weekly chart. This is a sign that buyers are finally out of breath and the stock may correct to the downside. A fall below support at $56 will open the way down to $54 and potentially $52.50 (50-day MA).

Cisco Systems Inc., daily chart

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