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Goldman Sachs Adds Cisco (CSCO) to Conviction Buy List; Analyst Points to 'Once-in-a-Decade Refresh'

April 24, 2015 6:33 AM EDT
Get Alerts CSCO Hot Sheet
Price: $49.27 +0.69%

Rating Summary:
    26 Buy, 30 Hold, 1 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 8 | Down: 4 | New: 35
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(Updated - April 24, 2015 8:42 AM EDT)

Goldman Sachs upgraded Cisco (NASDAQ: CSCO) from Buy to Conviction Buy with an unchanged price target of $34, suggesting upside of 19%. Analyst Simona Jankowski noted the stock's 15% discount to the market and improved secular position, as well as an emerging product cycle.

Jankowski explained, "We expect the stock to outperform on both upside to estimates and multiple expansion. We see upside to FY16 (Jul) estimates from an emerging product cycle in campus switching and enterprise WLAN, driven by the move to 802.11ac Wave 2 which requires an upgrade to multi-gigabit switching speeds. We also see room for meaningful multiple expansion, with the stock trading at a 30% discount to the S&P, as the market’s focus shifts to Cisco’s improved secular position with its Intercloud solution for public/hybrid cloud and its leadership in the emerging Internet of Things (IoT)."

"We are raising our estimates to reflect our view that, even after Cisco’s data center switching product cycle in FY15 wanes, Cisco is likely to see upside from a campus switching product cycle in FY16, as customers who want to adopt the new Wave 2 WLAN products ramping in 2H15 upgrade to Cisco’s new 2.5G/5G campus switches – a once-in-a-decade refresh," added the analyst.

For an analyst ratings summary and ratings history on Cisco click here. For more ratings news on Cisco click here.

Shares of Cisco closed at $28.68 yesterday.



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