Enterprise tech giant Cisco (CSCO) is pushing new highs, trading near $26 a share. But a look at the charts reveals an unfortunate ceiling for CSCO right around this price that dates back to its 2007 fall from grace.
Specifically, Cisco hasn’t traded above $26 for more than a few trading days since the market’s historic highs in late 2007, and it hasn’t traded above $27 once.
With the stock up almost 60% in the past 12 months, it is safe to say that it might be time for a pullback.
After all, the fundamentals don’t give any reason for spectacular performance. Cisco has a five-year growth rate of about 7.5% annually, with revenue moving up slowly but steadily; recent sales numbers seem to be in line with this, including a 5.4% revenue bump in its last quarterly report and expectations of about 5% on average this time around.
Hardly seems like a reason to go nuts, but apparently the very low expectations of 2012 have been replaced by a bit of a relief rally in 2013.
Don’t expect that optimism to last. Investors are going to demand material growth in Cisco eventually, and an earnings miss could be very damaging to share prices.
Look for some fireworks on Aug. 14 when Cisco earnings come out.