One of the biggest winners from the West's sudden concern about the security of telecommunications products made by Chinese firm Huawei Technologies Co. is Cisco Systems Inc. (CSCO - Get Report) , according to a note from JPMorgan analyst Samik Chatterjee.
The U.S. is considering an order to prohibit the use of Huawei equipment by domestic service providers, while other prominent countries like the U.K., Germany, France, Belgium, Australia, New Zealand and Japan also have shared concerns about the company's privacy and data security.
This development will turn into a headwind for Action Alerts PLUS holding Cisco, according to Chatterjee.
"While the US is considering a potential order to stop the use of Huawei equipment by US service providers, the opportunity in the domestic market is fairly limited given Huawei's largely nonexistent presence. A greater opportunity lies in the international markets (EMEA and APAC ex-China) and we expect companies with established global presence (again primarily Cisco and Ciena amongst others) to be well positioned to benefit from a pullback in business wins relative to 5G networks for Huawei," Chatterjee wrote.
Shares of Cisco were up 6.5% on Friday.
Action Alerts PLUS senior analyst Jeff Marks noted that Cisco has been one of the charitable trust's top picks for a while.
"We've been telling club members of Action Alerts PLUS that Cisco is one of our favorite positions for 2019. We think the revenue shift to more durable, higher margin software and services products from hardware justifies a higher market multiple," Marks told TheStreet.