Barclays: Cisco Has No Plans To 'Crank Up The M&A Machine', Says Stock Could Be A 'Supertanker'

The brokerage said its meeting with CEO Chuck Robbins supports its view that the stock can be a supertanker for long-term investors — "i.e., measured strategic investments supporting industrials-type growth and shareholder returns."

Diversification And Cash Flow

Meanwhile, Cisco is also intensifying its focus on open stack, as reflected by recent contributions to Open Compute Project (OCP).

"Revenue growth bogey could have upside potential. Security, analytics, and IoT were initiatives mentioned for elevating revenue growth," analyst Mark Moskowitz wrote in a note.

Related Link: Cisco Price Target Raised By UBS On Tetration Offering

Cisco expects to make more announcements on these fronts in the coming year, and, down the road, these initiatives could add modest upside to the long-term revenue growth target of 3 percent.

The analyst noted that Cisco's margin and cash flow should benefit from its diversification efforts.

"In our view, Cisco's margin and cash flow trends could become even sturdier over time, due to the prospects of greater contribution from margin-rich software and subscription elements," Moskowitz highlighted.

Further, Cisco could benefit from cloud disruption as Moskowitz "continues to view networking vendors as the 'picks-and-shovels' of the cloud gold rush."

Moskowitz said Cisco noted both its security business and broader role in evaluating work load management are helping its model and account control benefit from cloud adoption.

Moskowitz has an Overweight rating and $31 price target on the stock.

According to TipRanks, Moskowitz has a success rate of 60 percent with an average return per recommendation of +14.2 percent. The analyst is ranked 132 out of 3,977 analysts.

At the time of writing, shares of Cisco were up 0.21 percent to $28.86.