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Morgan Stanley Cuts Cisco Stock Rating Ahead of Analyst MeetingMorgan Stanley Cuts Cisco Stock Rating Ahead of Analyst MeetingSavitz, Eric J. Barron's (Online); New York Cisco Systems shares are trading modestly higher Thursday amid some conflicting analyst thinking on the near-term outlook for the networking giant. Cisco (ticker: CSCO) is holding a rare meeting with analysts on Sept. 15—the last one was in 2017—and more-bullish observers think the session could be a catalyst for the stock. But Cisco shares already have rallied 34% for the year through Wednesday, and that has one key analyst backing away for now. Morgan Stanley analyst Meta Marshall on Thursday reduced her rating on Cisco shares to Equal Weight from Overweight, with a new price target of $59, up from $57. The stock closed at $58.68 on Wednesday. She writes in a research note that Cisco's recent rally has moved up the stock's valuation closer to its historical discount to the S&P 500. Marshall writes that she remains confident in the company's growth story, but that further gains will require accelerating growth in the company's software business and more business from the large cloud-computing companies. The company saw 160% growth in orders from cloud customers in the July quarter. Marshall had upgraded the stock last July , noting at the time that the stock's discount to the S&P 500 had reached a 10-year high. But she says the gap has now largely closed. Evercore ISI analyst Amit Daryanani is more bullish. Repeating his Outperform rating and $63 target price, Daryanani adds a "tactical outperform" designation to the stock, anticipating a potential lift from the analyst meeting. "We think the analyst day could provide a positive catalyst for the re-rating to sustain driven by better disclosures around cloud revenue trajectory and its software portfolio," he writes in a research note. Wells Fargo analyst Aaron Rakers is feeling bullish, too: He repeats his Overweight rating on Cisco shares, while upping his target price to $70 from $65, asserting that the analyst day should be a catalyst for the stock. Like his peers, he sees a focus at the meeting on the company's software and cloud businesses—and he also expects an update on the company's capital return strategy. Cisco shares were up 0.2%, at $58.82, in recent trading. The S&P 500 was also up 0.2%. |
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