Cisco stock price continued its bull run this week and is now trading at its all-time high.
It has jumped in the last six consecutive weeks, bringing its market capitalization to nearly $400 billion.
Still, despite the stock being highly overbought, Jay Woods, a popular Wall Street analyst, believes that CSCO stock may surge by over 25% after its earnings.
Data compiled by Yahoo Finance shows that analysts predict that the Cisco Systems business continued growing in the last quarter, helped by the ongoing AI boom that has boosted demand for its servers and networking products.
The average estimate among analysts is that the revenue will jump by nearly 10% to $15.5 billion, with the earnings-per-share (EPS) rising from $0.96 to $1.04.
Its annual revenue is expected to grow by 8.73% to $61.7 billion, with the EPS rising to $4.16.
The most recent results showed that Cisco’s business continued growing, with its hyperscaler AI infrastructure rising to $2.1 billion, marking the sixth consecutive quarter of growth.
It expects to take over $5 billion in AI orders, a number that may ultimately be higher than expected, as evidenced by the surge in capital expenditure plans.
Cisco continued to return cash to their investors. It bought shares worth over $1.3 billion in the second quarter and boosted its dividend payments to its shareholders.
With the stock trading at $98, the 200-week moving average is at $61.42. As such, there is a risk that the stock may go through mean reversion soon.
The Relative Strength Index (RSI) has jumped to the extreme overbought level of 77, its highest point since 2018.
Therefore, there is a risk that the potential strong results have been priced in, which may push the stock to retrace some of the gains.
However, in an era of exuberance, this view may not be realized as we experienced with Intel recently. Its stock was up sharply before earnings, a rally that accelerated after this happened.
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