Could we be seeing a top in the price of Cisco (NYSE:CSCO) shares? What's the first clue? A herd of Wall Street brokerages, among them Pacific Crest, Deutsche Bank and Credit Suisse, have at last upped their ratings on the networking technology giant's stock.

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Mind you, Cisco stock has gained more than 25% since I recommended it in February. Between then and now, brokerage analysts have pretty much stayed neutral or else pessimistic on the stock. And, as is often the case, they may now be too late to the game.

By my reckoning, expectations for any kind of turnaround in the company's businesses are now built in to Cisco's $22.44 (Learn how to use revenue and expenses, among other factors, to break down and analyze a company. Read Understanding The Income Statement.)

Correction, Not a Run
With the stock falling below $14 in March, the recent uplift is certainly justified. But, in my mind, the correction is now complete. Even as the company pushes into sexy, new advanced technology territories like home networking, digital TV and IP telephones, Cisco is going to be hard-pressed to post growth numbers that warrant anything much higher than its current price tag.

After all, Cisco is a victim of the law of big numbers. Like its large cap technology cousins Intel (NYSE:INTC) and Microsoft (NYSE:MSFT), the bigger Cisco gets, the tougher it gets to grow. Even a few billion dollars in extra sales won't do much for a company whose revenue is already in the billions. The thing is, in today's dismal economic climate, even flat line sales growth would be a pleasant surprise.

Competing and Winning
Cisco dominates the market for networking router and switch hardware. Nearly two-thirds of its sales come from these solid, cash-generating product lines. Unfortunately, Cisco and other networking vendors have watched sales in these markets deflate over the past couple of years as penny-pinching enterprises and telecom carriers slashed their equipment spending.

Of course, customers might start spending again but fierce competition from the likes of Juniper Networks (Nasdaq:JNPR), Brocade Networks (Nasdaq:BRCD), Alcatel-Lucent(NYSE:ALU) and from China's low-cost provider Huawei Technologies, could make it tough to show any kind of material growth for some time. (Evaluate the past performance before investing in high-tech funds, read Technology Sector Funds.)

Hard to Keep Climbing
So, to boost its market value any higher, Cisco will need really big gains from outside of its traditional hardware business. Cisco is going to have generate monstrous gains, as much as 30% I'd say, from its expanding advanced technology portfolio to justify its stock's forward price-to-earnings multiple of 17.

That's asking an awful lot. Revenue from advanced technologies totaled $2.1 billion, representing a decrease of 12% year over year. It's hard to see where the necessary growth will come from. Already, Cisco removed over $1 billion from its annualized expense run rate and hopes to stretch that number to $1.5 billion. But there is only so much fat the company can cut.

Of course, reducing its number of shares outstanding through share buybacks could boost earnings per share. The trouble is that Cisco is already buying back shares to offset the effect of the generous stock options issued to employees.

The Bottom Line
Cisco has seen a nice run-up in its shares and as a consequence, investors should think twice about snapping up any more of them. Of course, it may take a few more brokerage buy ratings before the Cisco finds a top, but it sure looks like it's getting there.

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