Cisco Is Upgraded to Overweight at Barclays With a $53 Price Target

Shares of the networking-equipment giant are raised to overweight at Barclays.
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Shares of Cisco Systems CSCO, the networking-equipment giant, were raised to overweight from equal-weight by Barclays analyst Timothy Long.

"We are more constructive on CSCO  shares following the lowered valuation and new product announcements," Barclays said in a note Thursday. "We see some fundamental shifts, and the stock has typically done well after guidance corrections."

The price target on the stock was set at $53, which is 14% higher than the stock's closing price $46.64 on Wednesday. The average price target or Cisco shares is $51.48, according to Bloomberg.

Analysts surveyed by Bloomberg previously rated Cisco Systems with 19 buys and two sells.

The stock was rising more than 1% in premarket trading Wednesday to $47.12. The stock has risen 7.64% so far in 2019 but has declined more than 5% over the past three months.

In November, Cisco Systems posted stronger-than-expected fiscal first-quarter earnings but said uncertain conditions would hit client orders in the months ahead.

Cisco said earnings for the quarter ended in September were 84 cents a share, 4 cents ahead of the Wall Street consensus forecast. Revenue rose 1% to $13.2 billion and topped analysts' estimates of $13.08 billion.

However, the company issued current-quarter guidance that missed Wall Street forecasts, with an earnings estimate in the region of 75 cents to 77 cents a share on implied revenue of between $11.8 billion and $12.1 billion.

Orders also declined in what CEO Chuck Robbins called "a challenging macro environment."

"All in, the quarter looked fine against previously muted expectations, however management had to lower numbers for the second quarter in a row," said Jim Cramer and the Action Alerts PLUS team, which holds Cisco in its portfolio. "You may remember how management previously cautioned about the negative dynamics impacting visibility, and as Robbins said on this conference call, 'there's been lack of clarity for so long that I think it finally just came into play.'

"Even so, there are still positives to point out, such as how well products like the Catalyst 9000 with the campus switching cycle are selling, as well as security services. But what Cisco can hang its hat on is the portfolio transformation story," the AAP team said.