Cisco Security Revenues Fall 2% as Analysts Raise Targets to $95
Cisco's security revenues fell 2% as legacy product sales declined, although next-gen offerings showed stronger uptake. Bank of America and Morgan Stanley raised price targets to $95 and $91, insiders sold over 130,000 shares at about $77 apiece, and Braun Stacey Associates boosted its stake 7.5% to 341,208 shares.
1. Security Revenues Fall as Legacy Products Weaken
In the most recent quarter Cisco reported a 2% decline in security revenue year-over-year, driven by customers shifting workloads to public cloud platforms and reduced demand for hardware-centric firewall appliances. Security appliance orders fell by 5%, while software-defined security subscriptions were flat. The company noted that legacy on-premise firewall sales, which represent roughly 40% of the security portfolio, contracted by 8%, offsetting mid-teens percentage growth in its next-generation intrusion prevention and zero-trust network access solutions.
2. Next-Generation Offerings Show Early Traction
Cisco’s newer security products continue to gain traction, with the SecureX platform adding 1,200 net new customers during the quarter and software recurring revenue rising 12% year-over-year. Cloud-delivered email security subscriptions exceeded 500,000 seats, up 18%, and advanced malware protection bookings increased by 22%. Management highlighted an expanding pipeline of enterprise deals worth more than $200 million in annual contract value for its integrated security software bundle.
3. Institutional Stake Increases Signal Confidence
Braun Stacey Associates raised its Cisco share count by 7.5% in Q3, bringing its total holding to 341,208 shares valued at $23.35 million as of the latest 13F filing. Other institutions such as Postrock Partners, Mount Vernon Associates and Wynn Capital each added incremental positions between 0.3% and 4.5%, collectively representing more than 1.5 million additional shares. Overall, 73.3% of Cisco’s outstanding shares remain in the hands of institutional investors and hedge funds.
4. Analyst Ratings Reflect Cautious Optimism
Seventeen analysts currently recommend a buy or equivalent rating on Cisco, while nine have maintained a hold stance, resulting in a consensus Moderate Buy. Over the past two months, Bank of America, Morgan Stanley and Piper Sandler all raised their target estimates for the company’s earnings growth potential, citing strength in software subscription margins and improving gross margins in its networking segment. Conversely, one boutique firm downgraded its view to neutral, pointing to near-term headwinds in hardware sales.