Cisco (CSCO) Upgraded to Buy: What Does It Mean for the Stock?

Core Viewpoint - Cisco Systems (CSCO) has received an upgrade to a Zacks Rank 2 (Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which are closely correlated with near-term stock price movements [4][6]. - Institutional investors often rely on earnings estimates to determine the fair value of stocks, leading to buying or selling actions that affect stock prices [4]. Implications of the Upgrade - The upgrade for Cisco indicates a positive outlook on its earnings, suggesting potential buying pressure and an increase in stock price [3][5]. - Rising earnings estimates reflect an improvement in Cisco's underlying business, which should encourage investors to drive the stock price higher [5]. Earnings Estimate Revisions for Cisco - For the fiscal year ending July 2026, Cisco is expected to earn $4.02 per share, unchanged from the previous year, but the Zacks Consensus Estimate has increased by 4.5% over the past three months [8]. Zacks Rank System Overview - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [7]. - Cisco's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10].