CSCO
Cisco Systems, Inc.
$111.77
Stable Earnings Power
65%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Overvalued
Trading 59.1% above fair value
You pay
$111.77
Bear
$56.22
Fair
$70.27
Bull
$84.33
Bear
$56.22
-49.7%
$2.76 × 12x P/E
Fair
$70.27
-37.1%
$2.76 × 15x P/E
Bull
$84.33
-24.6%
$2.76 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
40.4x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $123.80 from 73 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $70.27 per share.
Warnings
Dividend-based valuation: $28.46 (below our primary estimate by 31%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $123.80 (from 73 analysts). Our estimate is 67% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples