NEW YORK (TheStreet) -- After a tough few weeks for Cisco (CSCO) 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."