Analyst: This Dow Stock Could Rally Another 24%

The shares of Cisco Systems, Inc. (NASDAQ:CSCO) are muscling higher today, after pulling back with the broader stock market earlier this week. Bolstering the blue chip is a bullish analyst note, with Goldman Sachs adding CSCO stock to its conviction list, and hiking its price target to $54 -- a premium of 24% to the stock's current price. "We expect Cisco to deliver significant returns to shareholders from the recently enacted tax laws," he wrote. At last check, CSCO shares were 1.2% higher at $43.59.

Prior to this week's tech sell-off, Cisco stock was flirting with 17-year highs. The equity peaked at $46.16 on March 13, and is now testing support atop its 10-week moving average. This trendline has ushered the Dow stock higher since mid-2017, helping CSCO soar 36% in the past nine months.

Today, however, options traders aren't buying the bounce. Cisco Systems puts are crossing the tape at 1.6 times the average intraday pace, with 20,000 already traded. Most active is the weekly 4/6 37.50-strike put, which has seen apparent buy-to-open activity. By purchasing the puts to open, the buyers expect CSCO shares to retreat beneath $37.50 -- an area that acted as chart support during the early February correction -- before the close on Friday, April 6, when the options expire.

On the other hand, the out-of-the-money put buyers could be Cisco shareholders seeking an options hedge. By purchasing protective puts on the high-flying stock, the traders can lock in an acceptable price at which to sell their shares, should the equity take a turn for the worse.