Cisco Systems reported positive free cash flow for the latest quarter ending Jan. 24, 2026, with a strong FCF margin and higher earnings guidance. Analysts have raised target prices for CSCO stock, with an average of $87.86, 14% higher than the current price of $76.87. Despite a recent dip, the stock has good upside potential.

In its fiscal Q2, Cisco’s revenue increased by 10.3% to $15.3 billion, with EPS up 11%. Operating cash flow was down, but FCF was $1.539 billion, representing 10.0% of revenue. Despite higher capex spending, FCF remains strong, and management’s higher revenue forecasts suggest further FCF growth in the future.

With revenue expected to rise to $63.245 billion in the next 12 months, analysts project a potential FCF increase to almost $13.3 billion. Based on these forecasts, Cisco’s market value could reach $332 billion, 10% higher than the current market cap. Analysts have varied price targets for CSCO stock, ranging from $84.56 to $98.23.

One conservative strategy to play Cisco’s potential upside is to sell short OTM put options with a one-month expiration period. For example, selling the $72.50 strike price put could yield $87 immediately, providing a potential entry point 6.8% lower than the current price. This strategy allows investors to benefit from Cisco’s potential growth while managing risk effectively.

Read more at Barchart: Cisco Systems Reports Lower Free Cash Flow