Cisco Downgraded by HSBC Amid Profitability Concerns

Cisco Systems' (NASDAQ:CSCO) stock has received a downgrade from HSBC, which now rates it as 'hold'. This change in rating is likely to have an impact on investors who were previously bullish on the company. According to HSBC's target price of $120.00, there is a potential upside of 5.75% from the current price.

This downgrade comes after several analysts have raised their price targets for CSCO, including UBS Group and Citic Securities. Despite the mixed signals, Cisco's revenue has been increasing, with a 17.6% year-over-year rise in the last quarter. The company also exceeded estimates with its fiscal Q4 non-GAAP earnings of $1.22 per share.

However, some analysts have expressed concerns about Cisco's profitability, citing squeezed gross margins and questioning whether the company's AI acceleration can justify its premium valuation. Despite this, several analysts remain bullish on CSCO, maintaining their 'buy' ratings despite the market reaction.