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TheStreet Open House

A Chart You Should See: Cisco's Rise and Fall

CSCO Chart CSCO data by YCharts

NEW YORK (TheStreet) -- After a tough few weeks for Cisco (CSCO - Get Report) stock, the tech bellwether will be keen to convince investors that it can handle spending and competitive pressures at its financial analyst conference on Thursday.

After enjoying a summertime rally, the tech giant's shares have plunged 12% since it reported its fiscal first-quarter results last month. Weighed down by weak tech spending Cisco missed Wall Street's revenue forecast, sending the firm's shares plummeting. Speaking during Cisco's earnings conference call, CEO John Chambers highlighted the "inconsistent" macro environment. More specifically, Chambers pointed to the impact of the federal government shutdown and the fallout from the NSA snooping controversy in China.

In contrast, shares of rival Brocade (BRCD) have climbed more than 4% since it reported its own fiscal fourth-quarter results last month. Despite the tough spending climate, Brocade's numbers came in better than expected and investors appear to be acknowledging the firm's fiscal 2015 growth plan.

Overall, Cisco's shares have gained just 6.26% this year, while Brocade shares have climbed 58.16%.

On Wednesday, before market open, Citi Research initiated coverage of Cisco with a "sell" rating and an $18 price target. "We forecast revenue grows at a slower 3-5% pace over the next 3 years than both Cisco's existing 5-7% long-term growth target and the Street at 6%, from share loss in Cisco's core routing and switching markets," wrote Citi analyst Ehud Gelblum, in a note. "We expect this slowing revenue growth and uncertainty around Cisco's position in the data center to result in multiple compression despite an attractive 4% dividend and 9% free cash flow."

Last month, following Cisco's earnings, CFO Frank Calderoni acknowledged the spending challenges that the company is facing, particularly in the service provider space and emerging markets.

Nonetheless, the CFO struck a bullish long-term tone. "We have been emphasizing investments in security, emphasis in cloud, emphasis in data center, emphasis in services - we're continuing down that path," he told TheStreet. "From our long-range business and financial model, we're confident in our ability to execute on that over a long period of time."

CEO John Chambers kicks off Cisco's financial conference at 8 A.M. EST on Thursday, followed by Rob Lloyd, the company's president of development and sales, and Calderoni.

Cisco shares closed down 1.56% to $20.88 in Wednesday trading.

--Written by James Rogers in New York.

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