Piper Sandler analyst James Fish reiterated Cisco Systems Inc with a Neutral rating but significantly raised the price target from $47 to a more optimistic $51.

The tech giant Cisco recently secured approval from the EU for its impending deal with Splunk, allowing the acquisition to finalize well ahead of schedule on March 18, providing Cisco with a head start on realizing Splunk’s value in its fiscal third quarter.

To finance this monumental acquisition, Cisco raised a substantial $13.5 billion in debt at an average cost of 5% at the end of February.

Analyst Fish’s “Base” Case now incorporates the impact of the Splunk deal, envisioning Splunk reaching over $5 billion in revenue by fiscal 2026. He projects impressive figures such as $403 million in free cash flow accretion for fiscal 2025 and $1.2 billion for fiscal 2026.

In a more optimistic scenario, Fish’s “Realistic Upside” case predicts exceptionally high growth for Splunk, with an operating margin exceeding 50% in fiscal 2026, resulting in $1.8 billion free cash flow and $0.17 EPS for the same fiscal year.

Fish praised Cisco’s improving visibility, Splunk’s strategic importance, Cat9K renewals, and a consistent capital return program. He also highlighted the potential for advancements in AI and datacenter Ethernet systems.

However, Fish raised concerns about Cisco’s exposure to networking’s down-cycle, insufficient presence in the Cloud vertical and high-end data center switches, recent downward revisions in forward numbers by management, and challenges in Organic Security and Collaboration sectors.

In terms of financial projections, Fish estimates third-quarter revenue and EPS to stand at $12.7 billion and $0.86, respectively.

Despite a 4% drop in Cisco stock last year, investors looking to capitalize on Cisco’s potential can consider exposure through First Trust NASDAQ Cybersecurity ETF and First Trust DJ Internet Index Fund.

Also Read: Cisco’s Long-Term Prospects Shine with AI and Security, Analysts Stay Optimistic Despite Challenges

Price Action: On the last check Wednesday, CSCO shares were trading slightly higher at $49.15.

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