By
Godfrey Benjamin
April 11th, 2024
While some companies are setting records seeing their stocks high, Cisco (CSCO) stock is far away from its record levels. Is it a great time to buy CSCO shares?
Cisco Systems Inc (NASDAQ: CSCO) stock price rose yesterday but is slightly down in the pre-market. Experts at Morgan Stanley believe that Cisco (CSCO) stock price is at an optimal level to buy. Many think that Cisco (CSCO) stock is cheap compared to its underlying levels.
At this time, the demand for IT products is at an all-time high. The COVID-19 pandemic has forced most businesses to function remotely. Cisco services such as video teleconferencing, cybersecurity products, and so on.
Cisco (CSCO) stock prices are at record lows after bubble levels of $82. Yesterday, CSCO closed at $46.70 with a 1.94% rise. Today in the pre-market, the stock is 0.26% down.
Cisco (CSCO) Stock Price amid Business Growth
As with most technology companies, there appears to be new growth due to the COVID-19 pandemic. The rise in remote working due to the movement restrictions has enabled an exponential increase in orders for these services.
Cisco has cash holdings and short-term investments worth $28.6 billion. This will go a long way in enabling the company to meet its obligations without much stress. Cisco changed its revenue units for reporting in 2018. The company now has five business units. They are infrastructure platforms, other products, services, applications, and security.
The company’s Infrastructure platforms business unit is still by far the most productive. The business unit brought in 58% of the company’s revenues last year.
Cisco is the market leader in several areas. On a global scale, Cisco still dominates the ethernet market with a 52% share. It is as of the first quarter of this year. Its 44.2% lead in the third quarter of 2019 in the WLAN market is also noteworthy.
It is also making inroads into the cloud infrastructure industry with a 6.2% lead last year.
The company faces stiff competition from other technology companies. Companies like Huawei Technologies Co Ltd and on the video end Zoom Video Communications Inc (NASDAQ: ZM) are all jostling for their share of the network pie.
Technology Companies Are Ready to Expand
It seems to be a trend for most technology companies that are in a strong position to reinvest a portion of their cash holdings through a stock buyback.
Cisco has done this and then some. The technology company has steadily made inroads with its case by stock buybacks, acquisitions, and paying dividends to shareholders. Its quarterly results indicate a $981 million share buyback. There is a left-over amount for stock purchases of $10.8 billion. There is no end-date for its buyback program.
Cisco and other technology companies in its position are looking toward acquisitions at this time. The company has over $10 billion in cash and cash equivalents. It is more than enough for great decisions when it comes to selecting target companies.
While there are significant risks posed by competitors, Cisco seems to have a good hold on its business model. The only thing it has to do at the moment is to keep its innovation up. So, yes, now it can be a great time to buy CSCO stocks.
But let us remind you that the information presented here is informational purposes only and doesn’t constitute professional advice.