Cisco Stock Draws Slew of Bull Notes on Revenue Forecast

Options bulls are blasting CSCO in response

Digital Content Manager
Sep 16, 2021 at 10:37 AM
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Tech giant Cisco Systems Inc (NASDAQ:CSCO) is trading sideways today, last seen down 0.1% at $57.51, despite the company forecasting revenue growth of 5% to 7% in the next four years. In response, Credit Suisse upgraded the security to "outperform" from "neutral," and raised its price target to $74. No fewer than five other analysts chimed in with price-target hikes as well, with J.P. Morgan Securities adding the equity to its analyst focus list.

Before today's fresh round of bull notes, the majority of firms were already bullish towards CSCO. Of the 18 analysts in coverage, 11 carried a "buy" or better rating coming into today, while the remaining seven gave the security a tepid "hold" rating.

The options pits echo that optimism. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), CSCO's 50-day call/put volume ratio of 3.57 sits higher than 79% of readings from the past year. This means long calls have been getting picked up at a quicker-than-usual clip as of late.

Drilling down tot today's options activity, 27,000 calls have crossed the tape so far, which is triple the intraday average. Most popular is the January 2022 70-strike call, followed by the September 58.50 call. Buyers of the latter expect more upside for CSCO by the time these contracts expire at the close tomorrow.

These options traders are onto something, as Cisco System stock sports affordably priced premiums at the moment. The equity's Schaeffer's Volatility Index (SVI) of 18% stands higher than just 8% of readings from the past 12 months. In other words, the options market is pricing in low volatility expectations for CSCO right now.

Digging deeper, the security is just taking a breather from its Aug. 25, record high of $60.27, though support at the 40-day moving average has contained its latest pullback. And while shares are now contending with a ceiling at the $59.50 level, CSCO remains up 42.8% year-over-year. 

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