Cisco Stock Price Prediction: New Sanctions Against Huawei Are Tailwinds for Cisco

motek 1The Cisco stock price prediction article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.


  • We should increase our position on Cisco while its stock still trades at below 20x Forward P/E valuation.
  • The new sanctions against Huawei are obvious tailwinds that can boost Cisco’s top line growth.
  • Cisco’s 5-year revenue growth CAGR is 0.77%. The U.S. Government’s punitive action against Huawei is therefore a blessing for Cisco.
  • Huawei faces a difficult future.  It won’t be able to get software updates and hardware components that are based on American companies’ design.
  • CSCO is radiating buy signals from its EMA trends patterns. CSCO’s 5-day EMA of $45.15 is above its 13-day EMA of 13 day EMA ($44.30) and 20-day EMA ($43.72).

I’m discarding the Neutral assessment that Seeking Alpha’s Quant Rating System gave Cisco (CSCO). This leader in networking equipment deserves a buy rating. Better go long on CSCO while it still trades at below 20x Forward P/E. I am highly confident that the new sanctions against Huawei will boost the future sales performance of Cisco. Seeking Alpha’s Quant valuation algorithm is ambivalent on CSCO because of the company’s atrocious 5-year revenue CAGR of 0.77%

cisco stock price prediction - price
(Source: Seeking Alpha Premium)

Cisco remains the safest bet if you like the $45 billion/year Ethernet switch & routers industry. Cisco is clearly stagnant because of Huawei’s much more affordable products. However, the intensified anti-Huawei campaign of the U.S. government is a big boost to Cisco’s long-term prosperity. The chart below illustrates that Cisco is losing market share but what it has, almost 48%, is still ascendant over other players in the switch & routers industry. 

cisco stock price prediction market share
(Source: Synergy Research)

Cisco is still is still rated the no. 1 investment you can have if you like the Computer Networks industry. Cisco is consistently profitable. Cisco can afford to reward its investors a dividend yield of 3.21%. Compared to its peers in the Computer Networks industry, CSCO’s price is not yet that expensive.

cisco stock price prediction-top stocks
(Source: MacroTrends)

Reduced competition from Huawei can help Cisco improve its 3.21% dividend yield. A shackled Huawei that cannot sell new switches and routers with updated parts and software updates can lead to better profitability for Cisco. Better net income numbers will compel Cisco to be more generous on its quarterly dividend payments. Go long on Cisco now on the big chance that it will increase its dividend growth to 20% per year.

(Source: Seeking Alpha Premium)

Great Managers Is Why Cisco Is A Buy

Cisco can be more profitable after Huawei starts losing customers due to the new sanctions that prohibits this Chinese firm from acquiring U.S.-designed hardware and software products. CSCO is worth adding to your long-term portfolios if you like profitable companies with dominant market shares. High-profitability is why you should invest on CSCO. For the past nine quarters, Cisco’s quarterly average net income is above $2.6 billion.

cisco stock price prediction - earning
(Source: MacroTrends)

Cisco’s most-compelling investing quality is its high TTM net income margin of 21.32%. More importantly, in spite of the stiff competition from Huawei and ZTE, Cisco still accomplished a 5-year net income CAGR of 16.90%. Cisco obviously has very competent managers. The managers were able to increase the profitability of Cisco in spite the stagnant 5-year revenue CAGR of 0.77%.

(Source: Seeking Alpha Premium)

CSCO is reasonably priced right now. Those hedge fund managers that sold their positions in Q1 2020 will likely go long again on CSCO. Retail investors should go long on CSCO before hedge fund and mutual fund managers starts doing bulk purchases of Cisco’s stock. The long-term scenario is that a handicapped Huawei will lead to better international sales for Cisco. Going forward, Cisco will attract more customers because governments and companies will avoid buying Huawei products that do not have updated software and hardware components.

cisco stock price prediction-hedge funds

At the expense of Cisco and other Western companies, Huawei still managed to grow its market share in Ethernet switches in Q4 2019. This was in spite America’s 2019-era sanctions against. The new sanctions versus Huawei should help Cisco regain market share that it lost to Huawei last year. You should buy CSCO now because there’s high probability that it can increase it market share in global Ethernet switches to more than 55%. If this happens, fund managers and institutional investors will stampede toward buying more CSCO shares.

cisco stock price prediction-top 5

The new normal of work-from-home is compelling companies to allocate bigger budgets for their cloud computing infrastructures. This trend means greater demand for Cisco’s routers and Ethernet switches. No thanks to COVID-19, it is possible to wrap up its 2020 fiscal year (ends this coming July 31) with annual sales of $51.5 billion and an EPS of $3.35.

The bleak future of Huawei as an international vendor of routers and switches is why CSCO deserves a Forward P/E of 18x. Multiply this valuation ratio to $3.35 and we can guesstimate that CSCO deserves a one year price target of $60.3. This number is higher than the average one-year price target of $52.244 that WalletInvestor has for CSCO.


Cisco is a buy. Its high net income margin of 21.32% will even go higher because Huawei is now handicapped. My high enthusiasm for Cisco is also due to its stock’s bullish one-year CSCO stock price prediction from I Know First. The predictive AI algorithm of I Know First gave CSCO a one-year forecast score of 100.57. This score is a clear bullish signal for CSCO. The AI of I Know First is also more advanced than that of WalletInvestor’s.


The stock prediction system of WalletInvestor relies heavily on technical indicators and moving averages. This is inferior to the more comprehensive programming of I Know First’s deep learning, quantitative-driven AI stock prediction platform of I Know First.

For those who like using technical indicators, I am happy to report that using Exponential Moving Average analysis, CSCO is a buy right now. CSCO’s EMA momentum should be exploited right now before fund managers starts doing so.


Past I Know First Success with Cisco Stock Price Prediction

I Know First has been bullish on CSCO shares in past forecasts. On February 22, 2019, the I Know First algorithm issued a bullish 3-month forecast for CSCO with a signal of 1.98 and a predictability of 0.42, the algorithm successfully forecasted the movement of the CSCO share.  After 3 months, CSCO shares rose by 12.71% in line with the I Know First algorithm’s forecast. See chart below.

past forecast
cisco stock price prediction - past result

Here at I Know First, our AI-based algorithm has modeled and predicted assets price movement worldwide for short-term and long-term time horizons, ranging from 3 days to a year. Since 2011, we have been providing machine learning stock prediction, as well as S&P 500, Currencies forecastingApple stock predictions and, in particular, Apple stock news. Today, we are producing daily stock market outlook for over 10,500 assets, including gold outlook and commodity predictions. These forecasts generated by our quant trading tool are used by institutional clients, as well as private investors and traders to identify the best investment opportunities in the market.