UPDATE: Barclays Downgrades Cisco (CSCO) to Equalweight

Barclays analyst Tim Long downgraded Cisco (NASDAQ: CSCO) from Overweight to Equalweight, PT $46.00 (from $56.00).

The analyst comments "We had been positive on market share gains in the cloud vertical, and the move to software. For the cloud business, CSCO doubled relative share from 2019 to 2021, but has since stalled. We now see a more balanced share position going forward. The move to a more software-based model has been slow, and product backlog growth has been a negative impact. Regardless, we see peer companies growing faster in software despite similar backlog dynamics, likely highlighting weakness of some CSCO stand-alone software offerings. We also see CSCO more vulnerable to macro and enterprise risks. Our surveys have shown downticks in spending and, although networking has hung in there, some industry experts see 2023 campus networking revenues declining by 4% in 2023. We also see CSCO market share to remain pressured in key verticals like switching, routing and Wireless LAN, and there is risk as older switches transition to the 9k. We move to an EW rating from our prior OW and lower our PT to $46 from prior $56, based on a 13x multiple (down from 16x) on our FY23e EPS of $3.51. The target multiple is relatively in line with historical averages and peer companies, and we see limited multiple expansion due to various fundamental headwinds."

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 $42.58 yesterday.

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