Cisco stock hit a record high Thursday, but shares are poised to soar even higher following the networking company's blowout fiscal third-quarter results , according to Morgan Stanley. The investment bank has an overweight rating on Cisco and raised its price target to $120 from $91, implying 18% upside from Wednesday's close. "Multiple relative to other AI capex names still reasonable, growth higher than in 15 years, estimates still likely have room for upside, keeping us OW," analyst Meta Marshall said Thursday in a note to clients. Shares surged 14% Thursday morning following the better-than expected report and surprisingly strong financial outlook. Earlier, shares sailed to a record high just north of $119. CSCO YTD mountain Cisco shares year to date In the quarter ended April 25, Cisco earned $1.06 per share after adjustments versus the $1.04 expected by analysts polled by LSEG. Its revenue came in at $15.84 billion, topping the Street's consensus estimate of $15.56 billion. Cisco called for its adjusted earnings to fall in the range of $1.16 to $1.18 per share for the fiscal fourth quarter, topping the $1.07 per share estimate. Through Wednesday, Cisco's forward price-earnings ratio was just 23. That compares with a forward multiple of peer Arista Networks of more than 37. Other AI stocks mostly have forward multiples higher than 25 and that's where Morgan Stanley sees Cisco's valuation eventually going. The firm derived their $120 price target by applying a 25 multiple to their earnings estimate of $4.70 a share for 2027. "We also see greater durability in the AI upgrade cycle, which helps address concerns around runway and supports a higher valuation," Marshall wrote, noting that Cisco is now tracking modestly above its long-term growth model set forth during its 2024 analyst day. Morgan Stanley's call falls in line with consensus on the Street. Of the 26 analysts covering Cisco, 18 have a buy or strong buy rating on the stock. Shares are up 52% in the year to date.
