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Goldman: Cisco ‘running out of levers to drive meaningful upside’

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Shares of Cisco Systems fell about 1 percent Wednesday as Goldman Sachs said it saw limited upside for the stock.

Analysts at the investment bank downgraded Cisco shares to "neutral" from "buy," saying the firm is "running out of levers to drive meaningful upside."

"In our view, three of the key levers that drove outsized EPS [compound annual growth rate] of 7.6% over the last 5 years are now largely exhausted, including 1) server share gains, which are now leveling off, 2) expanding operating margins, as OMs are now at a 10-year peak, and 3) capital allocation, as buybacks should slow post the 24% dividend increase this year (to a 3.6% yield/44% payout)," Goldman said in a Wednesday note to clients.

The bank also lowered its price target on the Dow component to $35 from $32. On Wednesday, the stock closed at $28.65.

In 2016, the tech giant's stock has risen more than 5 percent.

CSCO year to date


Disclosure: Goldman makes a market in Cisco stock.