Opposing forces were lined up around
Monday morning as the stock's recent run-up was described separately as either justified or overdone.
The latest salvo was from UBS, which downgraded the network-equipment giant to hold from buy, primarily on valuation. The brokerage noted Cisco's price is currently above its $14.50 price target. While UBS expects to stock to run up to $16 or $17 once its 2004 earnings are clarified, it said it doubted that will happen before the end of its spring 2003 quarter.
Cisco was the most heavily traded issue in the Instinet premarket session and despite the downgrade was recently up 2% to $15.19. Investors were focusing on a story in
detailing recent market share gains and efforts to break into businesses like Internet telephony, storage and wireless networks. The story made a case that given Cisco's $21 billion in cash, an extended technology drought is to its advantage because it will force competitors out of business.
Cisco's shares have rallied from just over $8 in October to a recent level of just over $15. That's about 28 times expected 2003 earnings and 25 times 2004 estimates.